Frustrated with Bigger Pocket Posts

Investor · Walden, NY · Member since 2015 · 49 posts · 43 votes

11y

Katie,

I didn't mean to come across harsh, but I've been hearing a lot of people in my circle talking about how hard things are these days, and honestly it is not that difficult. Our generation has a knack for putting themselves in a bad situation(credit card debt, student loan debt, new car payment, mortgage that makes saving impossible, etc.), then complaining about how its hard to save or invest.

My story is not interesting or inspiring, I bought an acre of land that had a small house that was falling down with my entire life savings. I salvaged the foundation, well, septic system and built a new house there. I rented a room and lived like a Bozo for the 2.5 years my place was under construction. I only could complete work when I had the cash for materials, so it took a long time.

The sacrifices that can be made to assist along the way have already been mentioned, in particular by @Ally H..

The best advice that I can give is: Don't borrow money that isn't going to make you money or enable you to live cheaper until you can comfortably do so. I wish you a lot of luck and I also admire your courage to speak your mind because it really sparked a great thread!!

1 Reply

Craig E.

Investor · Sacramento, CA · Member since 2011 · 87 posts · 56 votes

11y

Some would argue that when you're ready to buy in 2 years IR's may be at 7% and your condo could be worth double what it is today. Others would say that your market is flat, condos are too risky, we're in a bubble and you should amass cash and wait for a crash. Will you be even more frustrated in 2017 or will you be happier with less debt and higher prices/rates? Or, do you think the market will crash by 2017 and it will be the buying opportunity of a lifetime?

Interested to know what you're thinking globally.

1 Reply

Jeremy S.

Elizabeth, PA · Member since 2015 · 44 posts · 11 votes

11y

@Katie Douglas

I can relate to some of your frustration. I am a 24 year old recent college grad and have over 70K in student loan debt. However that being said, when I graduated with my first degree I realized it would not bring me the kind of lifestyle I wanted so I stayed in college full-time taking 18 credits and worked full-time in a juvenile detention center making less than 30K a year. I paid for most of my second bachelor's degree in a highly desired field. I graduated a year and a half later at the top of my class and nearly tripled what I was making a year. I budget well, I keep my expenses down, and I save a lot of my money to start to use towards REI.

If you sit around feeling sorry for yourself this is not the forum to be on. You need to get your mindset right first before tackling something like REI or anything for that matter. Life is all about your mindset. I am really big into the law of attraction- not so much thoughts only can provide wealth or whatever, but actual positive mindset, do well by others, and work hard and anything can happen for you. I do not tell this story much, but 6 months before I graduated I knew what job I wanted with a specific company that would allow me to save up a lot on money so I could finally start investing. I had been in contact with the guy who does the hiring to make sure my name was out there. I typed up an offer letter with X amount of dollar salary and dated it December 16th 2014 addressed to me from that company and signed it not knowing if or when I would have an interview or if they would even have a spot open for me. I had the interview a few days before that date and got the call that day. I truly believe things can go your way. I am passionate about it.

That being said, I sacrifice a lot with my job I travel and work 60 to 70 hours a week, but I know this is the road I have to take to success. I tell my friends the hours I work or how I have to move around the US a lot and they think I am crazy, but I know where I am heading there is not a doubt in my mind. It is not convenient that I have $70k in school loan debt and my payments are $800 a month, but that is part of the fun and part of the challenge. Honestly I had $55k in student loan debt after my first degree and if I didn't have any I think I would of settled for making $30,000 or $40,000 a year. It would of been harder for me to get into REI if that was my path even though it "looks" easier. Our generation is really messed up in the fact that they want something for nothing. Go out and get it. It sounds like you are more informed than most people at our age, but do something with that knowledge. Let it fuel your fire. Best of luck to you!

1 Reply

Jane A.

Investor · Shawnee Mission, KS · Member since 2015 · 423 posts · 114 votes

11y

Katie Douglas Thank you for sharing I did not have a chance to read all posts, somebody may already make this comment: I think your problem is not "too much marketing in some posts" or "your age or generational problems". You main enemy is your attitude. Your initial post is full of "limitations". I mean your thinking process limits your ability to see opportunities instead of obstacles. If you will find a way to focus on what is possible a you will find your way. Even in marketing posts you could find valuable ideas you could apply on your own, I mean without spending money

1 Reply

Jane A.

Investor · Shawnee Mission, KS · Member since 2015 · 423 posts · 114 votes

11y

Katie Douglas Thank you for sharing I did not have a chance to read all posts, somebody may already make this comment: I think your problem is not "too much marketing in some posts" or "your age or generational problems". You main enemy is your attitude. Your initial post is full of "limitations". I mean your thinking process limits your ability to see opportunities instead of obstacles. If you will find a way to focus on what is possible a you will find your way. Even in marketing posts you could find valuable ideas you could apply on your own, I mean without spending money

0 Reply

Chris Vail

Investor · Sacramento, CA · Member since 2014 · 308 posts · 94 votes

11y

@Katie Douglas I got really heated when I read your first post, and am glad I read all the way through to the end to get a different perspective on where you are. Is REI tough? Yes. Can anyone do it? Yes. Does everyone have the personal fortitude to make it work? Absolutely not.

You say you are motivated but then also in multiple posts say you are frustrated that people on BP haven't painted the most realistic picture from your point of view. BP is a tool and nothing more, does it have all the answers? No, but it does have a great community where you can ask just about any question in the REI arena and someone will more than likely give you an answer. I would say that if you are motivated, and I mean truly motivated then it wouldn't matter what you saw on BP in this post or that post, you would find a way to get what you wanted.

Here is my story, and I will start from a ways back. My family was not well off at all, I did not learn my money management skills from my parents, however I did learn my work ethic from them. I started working when I was 15, and I haven't not worked since then except for 3 of the 4 years I was in college, (Which I worked during the summer) the only reason I could go to school and not work were grants, loans, and credit cards. When I finished college 2002 I had around 5,000 in credit card debt, and ~18,000 in student loan debt. The only reason I was able to get out with only the debt I had was I lived very frugally (At this point I still had my same car that I bought when I was 16 which when I bought it was 20+ years old). I started working a job in my field (Mechanical Engineering) and also worked a second job nights and weekends. After 8 months I was laid off from Engineering job, at which point I started working full time at my second job (Which was a retail job). After 6 months I was a supervisor, and making about the same as my entry level Engineering job. 2 years after that a manager. The only reason I progressed as quickly as I did was I would do anything, and a lot of things that other people thought was not part of their job. So at this point I am making fairly good money. And of course with that I started living a slightly nicer life (I am in my mid 20's a this point), I bought a new to me car (spent 20k on it, looking back this was a stupid purchase, I could have easily just spent 4-5k and been just as able to get from point A to point B), I moved into a slightly nicer apartment, and I started going "out" more (food, bars, social spending). After about 2 years of this I started to realize how stupid I was being with my money, luckily at the same time as I was being stupid with my money I was investing into the 401k that was available to me as well as taking part of the employee's stock purchase plan (which is important later on). Once I realized how stupid I was being, I moved into the ghetto of my city and went from paying 800 a month in rent to about 350-400 depending on the roommates that I had, I stoped going out when I felt like it and started being selective on the money I spent and went back to living like a poor college kid even though I was making 50K+ a year. I aggressively started paying off my student loans, and credit card debt, and poring more money into my 401k and stock purchase program. And was debt free in about 1.5 years, was that time tough? Absolutely however the ends justified the means. I met my wife shortly after this and we moved to Sacramento when a job opportunity for me came up (we were not married at this point, however my job opportunity had the ability to pay for us so she would not have to work right away). Once we moved 2009 (got lucky here) we bought a house, I used a loan against my 401k as a down payment which at this time we had to come up with 20% down even though we were Owner Occupants of this single family house (super strict bank time frame). My wife found a job working for the state, not great pay but not bad pay, and for the next 2 years, we paid down here debt (she had a decent amount). We got married (Yay), however we paid for it, we had a party for our family and friends and then we took a vacation to a resort that if you stayed there for 7 days it included a legal US wedding, (we didn't invite anyone, as we didn't want anyone to feel like they had to come and spend money to get to where we were getting married and we didn't want to increase the cost of our wedding). So over ~15 years, I paid off all of my debt, except our primary residence, all of my wife's debt, used the stock money from my prior employer to put a down payment on our first rental property. So I am 35 now and I have just started my REI journey however it took me some time to get to a place where I was in a position to start. Could I have done things differently, yes, but you can't do anything about the past and can only work on what is in front of you.

Best of luck, and I would be happy to help you in anyway that I can as long as you are willing to help your self first.

5 Reply

Karen Bickford

Investor · Bolton, MA · Member since 2012 · 133 posts · 72 votes

11y

@Chris Vail That was a nice story thanks for sharing:)

1 Reply

Derek Daun

Investor · Sacramento, CA · Member since 2012 · 289 posts · 151 votes

11y

Hi Katie,

Like Joel Noel mentioned, if you have questions on posts, search more, and feel free to ask questions. Obviously not all topics apply to everyone, and that's okay. In some cases, they might not talk that much about the actual costs, because it might not be that important to the target audience.

Perhaps a better title this post would have been 'How did BP members with average income, student, debt, an no options for private financing get started?' (HINT: for many members, it probably wasn't in their 20s)

Here's how I would have answered that question (It looks like Chris Vail did the same):

I didn't really started earning income till I was about 25. (Long undergrad + grad school), and spent a number of years getting debt under control. In 2010, when I was 31, we moved from the rented town home in the trendy part of town to a not so good part of town where I bought a house. We thought the neighborhood was likely to improve. My mortgage was only a little more than half of what we had paid for rent, which allowed us to save money while my girlfriend (now wife), figured out how to turn that education (with student debt) into a career. She was underemployed at the time as a consequence of the recession. The house cost $115k; I think total out of pocket costs were about 12k. My wife drove a used 2000 Subaru, while I was living it up with a used 2004 VW golf. (Those are still our cars today) We lived there for four years. Total money invested in the house was about $20k (downpayment and minor improvements throughout the years, mainly new floors and a new water heater.) We also got married during that time. We paid cash. It helped that we asked for cash instead of gifts; the gift cash ALMOST covered the bar tab.

Four years later (2014), with my wife's career getting traction, we bought a second house in a much nicer part of town. The house cost $460k; it was a fixer upper. We paid the downpayment and rehab with money from saving those four years, and a 401k loan. The first renovation was to build a basement apartment in the house. It took most of our free time, and about 10k for the apartment, but we finished it in three months. Six months later, we refinanced the first house, and were able to pull out about $50k. With that money, we're in escrow on our third property right now. We hope to buy 1-3 properties in in 2016, depending on how much our equity appreciates and if we sell anything.

1 Reply

Ally H.

Property Manager · SF Bay Area, CA · Member since 2014 · 46 posts · 16 votes

11y

0 Reply

Wilson Churchill

Madison Heights, MI · Member since 2014 · 471 posts · 132 votes

11y

You have to start somewhere.. There will always be challenges to overcome.

I would recommend reducing your expenses to the greatest extent possible, while increasing your income. Easier said than done, but every dollar saved or earned makes a huge difference over time.

I would recommend trying to find a cheap house, ideally a Homepath or HUD home, pay cash for it, fix it up, live in it, and get some roommates. Refinance the home after 6 months or a year and use the money to buy your next property.

1 Reply

Ally H.

Property Manager · SF Bay Area, CA · Member since 2014 · 46 posts · 16 votes

11y

Originally posted by @Jane A.:

Katie Douglas Thank you for sharing I did not have a chance to read all posts, somebody may already make this comment: I think your problem is not "too much marketing in some posts" or "your age or generational problems". You main enemy is your attitude. Your initial post is full of "limitations". I mean your thinking process limits your ability to see opportunities instead of obstacles. If you will find a way to focus on what is possible a you will find your way. Even in marketing posts you could find valuable ideas you could apply on your own, I mean without spending money

I agree with Jane. When you mention that weddings are a 'need' rather than a want (and I recognize that it may be more of a need than want in certain families), I am uncertain how you will transform your motivation to actual hustling in your current mindset. Personally, we eloped (more due to personal than financial reasons), but even if a wedding is a 'need', it does not have to be a lavish wedding (and nowhere near the typical 5 figures that is quoted nowadays). There's no correlation between the wedding cost and success of the marriage. Anyway, to emphasize again that BP is a tool available for you to use, there are many success stories on BP that offer inspiration and real-life examples of how to get started if you want to look for ideas or direction.

Although it does sound like your budget does not contain much frivolous items (kudos to that!), are you spending the rest of your income on debt reduction? If you know you're going to have to replace your car(s) soon, then have you started budgeting for that expense? We personally found it critical to anticipate large expenses (in an emergency fund) when we were throwing every penny towards those student loans. Furthermore, I would also encourage you to consider estate planning and insurance needs (depending on whose loans they are under). My husband and I purchased 30-year term life insurance policies (inexpensive for healthy 20-year somethings) just in case. Plan for the worst & hope for the best!

1 Reply

Aaron Mazzrillo

Investor · Riverside, CA · Member since 2011 · 2k+ posts · 3k+ votes

11y

Originally posted by :

My husband and I are highly motivated. We just need more time/strategies to overcome a few obstacles and then we plan on investing heavily in real estate. These are things that I wish were mentioned more often in BP posts. Thank you for your comment and the resource suggestion. I will look it up!

I didn't mention anything about motivation. I'm motivated as heck to go fly fishing. I'm so motivated, my collection of fly rods are right here next to my desk.

BUT, it's Sunday night, I have a doctor's appointment this week, my left knee hurts and I really need to get that checked out, I've launched some new marketing pieces and expect the phone to be ringing by Wednesday, I have a few rehabs going I need to check on, my truck is full of stuff that needs to be unloaded, I have an appointment with my bookkeeper this week....

As for debt, I have more debt than I ever imagined possible. (I wish I had more!) My credit card bill every month is much higher than the debt you state you are carrying. I'm married. And I think you must made this last one up:

"There are not likely very many multi-family units in many towns and if there are they are probably expensive and in undesirable/dangerous parts of town."

You've got a million excuses which means you're stuck in the "getting ready to get ready" phase. You either take action or you sit on the sidelines watching the game and eventually go back to your life thinking it doesn't work and/or it's all a scam.

2 Reply

Chris E.

Investor · FL · Member since 2015 · 202 posts · 34 votes

11y

@Katie Douglas thanks for mentioning Mr Money Mustache, I hadn't heard about that one, seems interesting.

1 Reply

Shaun Reilly

Landlord and Rehabber · Newton, MA · Member since 2010 · 2k+ posts · 877 votes

11y

Originally posted by @Roy N.:

Originally posted by @Katie Douglas:

@Roy N.

Overall people are getting married less and having fewer children. But most people still do and those who do are more likely to have a college degree.

That sounds opposite of the trend in here where increased education correlates with later marriage rates, later families and fewer children.

Roy I have imagine she is making assumptions based on people she happens to know.

Just looking at the articles cited in her original post if you look at the CDC report using 2002 data and the 2013 Huffington Post article that looks to be using 2012 numbers the median age of marriage for women went from 24.8 to 26.9 and for men it went from 27.3 to 29.8. Supporting the general observation that people are waiting longer to get married these days.

For families I didn't see anything that really talked about the specific ages but for education the last citation made these 2 points:

30.3%

The percentage of women who had given birth in the past 12 months who had a bachelor’s degree or higher.

85.2%

Percentage of women age 15 to 50 who gave birth in the past year and who have at least a high school diploma.

So by no means are women in their prime birthing years more likely to have a degree looking at those numbers.

Rest assured the multi generational trends towards later marriages, later starting of families and fewer children in those families is alive and well, especially among those with higher levels of education and high socio-economic levels.

(And to head this off... If you are 26 and a millionaire investor that got married to your high school sweetheart at 19 and have 5 wonderful children... You are the exception not the rule!)

1 Reply

Carlos Fernandez

Investor · Miami, FL · Member since 2015 · 31 posts · 18 votes

11y

Ok, I haven't read the entire thread, but through the first 2 pages nobody had mentioned the fact that when you rent you pay tens of thousands of dollars for housing and you have nothing to show for it. When you buy, you immediately begin chipping away at the principal and over time you build equity. If you would save $100/mo to own as opposed to rent, I say go for it.

Maybe in rural Illinois there aren't as many multi-family options. If not, then build your portfolio through the sweat equity/FHA 203K route. 1st house is in both your names, then refi out in one name, buy house #2 in the other's name, then house #3 in the remaining spouse w/o an FHA loan. The beauty of FHA is that it requires little money down, and in an area where home ownership is quite reasonable, the loans are not too cumbersome.

As for ways of making extra $: you can try tutoring high school and/or college kids. Have them come to your house and charge less money for that. Trust me... the saved time is worth it. Also, charge by the month, not by the session, and give a discount for that. W/ high schoolers and adults, the constant commitments and busy lives hurts your bottom line. Some months, you'll make $400 off a few students, and the next... $75 b/c of illness, extra band practice, grandma's in town, etc. Charging by the month mitigates that. "You're sick on Tuesday? Ah, too bad. I hope you feel better. I have a slot open on Saturday morning." And you still get paid, as opposed to missing out for a week. Or two. Or three.

Re: academia, adjuncting. As an adjunct, your position is not guaranteed next semester, so COLLECT UNEMPLOYMENT INSURANCE. You're eligible. So if they're going to exploit you by paying non-living wages while the money gets burned on administration, collect what is due to you. You pay for the insurance, so take it.

But more important, Geeeeeeeeet out. Out, out, out. I wasted a decade and a half as a promising scholar with top tier pedigree. Higher ed has been completely de-professionalized, and the few tenure track jobs are just carrots to con the masses into thinking they have a shot a tenured position that is underpaid to begin with. My first post-PhD full time job was at a prestigious private U that paid me a couple of hundred bucks above food stamps, while charging their students $39K/yr. Plenty of deans and vice presidents around to tell everybody how amazing the school is, and have you seen the rock climbing wall?!!!

Best of luck to you guys!

2 Reply

Andrew Hawkins

Rahway, NJ · Member since 2015 · 2 posts · 1 vote

11y

I'm a millennial (25). I have no student loans (thanks mom!). I got a job in tech that pays decently and was able to double my salary in two years. I look around at people in my age group (say 25-30), and most of them don't have it together. They spend tons on living the life they were accustomed to when they lived with their parents (who were mid career and earning a lot more). They are in debt. They don't know how to save. Many of them will jump on any bandwagon to earn as much money so they can keep spending.

On the other hand, being able to invest (RE, stocks, etc) takes discipline and knowledge most people don't have. Here on BP, one of the first things mentioned is to get spending under control so you can invest in the first place. There are a lot of choices one can make. The first should be to get educated financially before wasting 10+ years partying. I aim to save 50% of household income after tax or more. It can be done even on median household income fairly easily. You can be working in retail, making $15-$20/hr and make REI work. It just takes dedication and knowing which sacrifices need to be made to achieve financial freedom in the long term.

Yes, having to work for piss-poor wages with debt sucks. It's not something I'd wish on anyone. However, it can be done if you are frugal. Knowledge is paramount to any endeavor of this kind. Here at BP (and sites like this), one should not simply strive to be average. By being here, you are not average.

(Note: median is a type of average, for which the word "average" can mean, in addition to mean and mode)

1 Reply

Vincent Crane

Realtor · Atlanta, GA · Member since 2015 · 693 posts · 357 votes

11y

This is a really interesting post, and you're definitely right on all those statistical points. It's absolutely challenging for someone with an income of 25-40k to save money with student loans, car payments, and all the other expenses. If you read rich dad poor dad, getting rich comes from the "Three E's, if you have education, experience, and excess cash, you can become rich. And if you have education and experience, you will have excess cash". You need to earn enough to have a "buffer" between income and expenses. It's a lot easier to do that if you make 70k than if you make 30k. I'd recommend getting enough education and experience to boost your ordinary income to a level where you can save $1,000 a month or so, and after 1-2 years you can get a multi-family, a duplex for $150k and rent out one side and live in the other for just putting 3.5% down. Most people can figure out a way to do that. It might take a few years but once you do, the results snowball. And living below your means, to increase that buffer of excess cash is absolutely key. One of the girls in a podcast we had, Paula Pant, was driving a 25 year old car while saving to buy her first triplex. Sacrifice is a must. Most people aren't willing to do it. Sacrifice might also mean moving to a different city. If you live in an area with weak job prospects or that's way too expensive... then that's going to be an obstacle. It's all about choices. You can choose to live where you do, or find a better market, choose a higher paying field/education. You can design your life how you want, but with low money down FHA loans, most people should be able to get into the game relatively easily.

1 Reply

Cal C.

Investor · Peachtree Corners, GA · Member since 2014 · 1k+ posts · 1k+ votes

11y

@Katie Douglaswell you stirred up a hornet's nest with that one. Simple answer if you don't like something ignore either by not reading it at all or by disregarding once you have read or partially read it. BP is here to make money while at the same time to be extremely helpful to readers, sometimes the two are too intertwined for someone's tastes and that is when they should simply move to the next article.

1 Reply

Cal C.

Investor · Peachtree Corners, GA · Member since 2014 · 1k+ posts · 1k+ votes

11y

@Katie Douglas

You should also take a hard look at all of the info @Brie Schmidt has out there. Similar position as you there in Chicago. Yes, she had some realty work experience, but she didn't have BP when she started out.

2 Reply

Shannon Sadik

Rochester, NY · Member since 2014 · 152 posts · 65 votes

11y

@Katie Douglas

I can relate to your post. I do feel that a lot of the written articles are full of fluff and just too short and vague to be practical. I find information from the podcast to be more applicable to me, or at least give better take aways. I completely understand where you are coming from in your post so I will tell you my real life story of how I got to where I am. It's not that glamorous and i haven't reached "success" --YET, but I am excited about the direction I'm going, and I hope you can relate to my story.

Since I was old enough to babysit at 13, I paid for everything on my own outside of the roof over my head and food at the table. At 23, I graduated from graduate school with a lot of debt and no job. The only job I could get was in Philadelphia so I moved there all on my own, not knowing a soul, and the old Mercury Marquis I'd had since I was 18 and bought for $2500 was not gonna parallel park in the tiny places available where I lived. I didn't have any money saved at all so bought a new cheap Saturn with no money down and had a $200/mo payment for a longer period of time than normal because that's what I could afford and they worked with me to sell me a car. I made $28000/year, and had a VERY high rent because it's Philadelphia after all. I lived VERY frugally, NEVER ate out, and still just couldn't manage to save anything because of my basic bills and it slowly got worse because I had some small moving costs to get to Philadelphia put on a card and i never could seem to pay them off because all I could afford was $50/mo to pay off the minimum. (Sound familiar so far?)

So this lifestyle wasn't working for me, and i finally decided to move to Phoenix where the cost of living was cheaper. I stayed with my sister for 2 weeks and was able to get an apartment and a new job for slightly more money and tried to save yet again. Finally, a roommate and I decided we really wanted to have more disposable income so looked for months for a cheaper place to live, but that was still nice. We finally found this really adorable 2 bedroom that was owned by a woman who didn't really care to make money off of it, she just wanted good tenants, and we fit the bill. We paid $900/mo total for the 2 bedroom and that included all utilities, so very cheap! By now, I was 29 and slowly progressed to better paying jobs until I was making $48,000/year. My boss gave me a big bonus one year for christmas and I took that and paid all my credit card debt with it and didn't use a credit card again for years. I also had a job with flexible hours and was inspired to reupholster furniture and re-sell it for more. i didn't know how to do this, but felt I had good taste so I called every reupholstery shop in the phone book until I found one shop willing to let me work for free for them so I could learn. FREE. I worked there for a year and then one day, I got laid off from my job. By then, I had about $3000 in savings and took a huge risk. I looked for a job and took that money and started reupholstering furniture I found on Craigslist and then re-selling it. It wasn't working that well, BUT it inspired a new business, where I acquired a bunch of vintage furniture and then started renting it to brides getting married or photographers. During this time, I got another full time job, got married and paid for the wedding all cash, totally DIY, and worked like a dog doing my business weeknights and weekends for 2 years.

By then, I was 33, and started getting an itch to "work smarter, not harder", and realized rentals would be much better passive income. The Phoenix market was too volatile and risky for me to feel comfortable around this time and there were no real duplexes there, so I convinced my husband to move to Rochester, NY where multi-families are everywhere and we could live super cheap. I sold my business for $16k and this totalled my savings from my business (which we never touched) to $40k. We sold our house, which we had just bought 2 years earlier, and made $50k on that. It was a little luck, but also I think I have a gut feeling for markets and intentionally bought in a growing area.

We moved to Rochester with a promise from our jobs to let us work remotely for 2 months until we found other ones, and looked immediately for jobs and a MF to live in. It was a risk, but it paid off. We got here and hit the ground running. I'd already found a realtor off of BP, been watching the MLS for 8 months and had a good idea of where we wanted to live, how things would cash flow, and what would be a good price since I ran every house I saw over the months through my pro forma. We found a cute duplex, and in my name only (my husband has a foreclosure on his credit) making $50k for a job that was about to end (but I didn't tell them that!), I got an FHA loan for only 3.5% down ($5250) and now we pay only $300/mo as the rent covers everything else. We still had our savings that I mentioned from above, and we also save everything else to go towards buying more.

We have been here less than a year and have bought another duplex and a single family since. We renovated the duplex and make $500/month on that and then got smarter and found the SF that doesn't require any renos and makes $800/mo! We put all of that directly back into savings and are still aggressively looking for more. I am particular about what we buy since we will eventually run out of cash for down payments and want to make the most cash flow possible to help save for more. Both my husband I make quite a bit less than we did in Phoenix, so it was a sacrifice, but we also live much cheaper and the potential is much greater so it worked out IMO.

Sorry for such a long post, but I hope that helps you see practically how you can go from where you are to somewhere else! I do feel that I am a bit behind other investors that I know who are younger than me and own more properties already, but it is helpful to remember that everyone's journey and circumstances are different and I'm just going to make up for lost time! :) Best of luck to you!

3 Reply

M Marie M.

Rental Property Investor · Washington, DC · Member since 2015 · 278 posts · 156 votes

11y

@Shannon Sadik thank you for your story. I love, love, love how you were able to take something like old furniture, add value to the product and find a market for it. That was inspiring.

0 Reply

Jim Shepard

Investor · Edwardsville, IL · Member since 2015 · 432 posts · 481 votes

11y

Katie,

Here's the short version. To get ahead in life it takes sacrifice. The founder of Holiday Inn, Blemmon Wilson quoted something to this effect. "I work the first 40 hours to keep up with the competition. I work the second 40 to surpass the competition." That has been my motto all my life.

Here's the long version...

I started working 20 hours per week when I was 13 in my parent's small business. I never had time to go to a high school football game because I was working. I saved and bought my own car - a 1971 Vega - a piece of crap but it was paid for.

I got married at 18 and still have the same wife 39 years later. She got an engagement ring that we could pay for and not finance ($200 with a .2 carat diamond - big spender). Our wedding cost a total of $1000 while most of our friends blew $7-10,000.

I got a degree in business at a state university that cost $6000. To put this in perspective a new Corvette was the same amount back then. A new one now is $75,000. I paid for the college tuition by detailing cars on the weekend while I was in school and working 40 hours per week at my normal job. My daughter just went to the same college that I went to and total bill was $40,000. For most people you don't have to go to Harvard at $60,000 a year. Try and pay that art degree off with a quarter of a million of debt.

You don't always get the job that you want right out of college making the money that you think you deserve. I took a job that wasn't with the company that I wanted to be at but it provided an income while I kept looking. It took 9 months but I found it. The early 80's was not a good time either to get a job. Interest rates were at 20% - how do you think that effected the bottom line of companies that were hiring? By then the wife and I had been married 5 years started our family. I had to grow up.

Here was my ah moment in life when I figured out how to make money or at least how not to spend it. I was moving up the corporate ladder doing fairly well. My new boss invited my wife and I out to dinner with his wife. He had it all or so I thought. Gorgeous 5000 square foot house. Both him and his wife were driving brand new cars. His kids even had brand new cars and a motorcycle. We went out for dinner and had a nice meal. Time for the check. His credit card was turned down! So was the second one! I ended up picking up the tab. I had a nice house with a big payment. A nice new car with a big payment. Guess this isn't the way to get ahead?

My wife and I went into business less than a year after that. I gave up the $75,000 a year job (23 years ago) with all of the perks. I gave up the new car for a car that we could pay for which was a 1984 Plymouth Reliant (Vinyl interior, AM radio but it had AC!). We sold our house for the down payment on the business and moved into a rental. We sacrificed and made a whopping $25,000 our first year in business - that's both of us working. I was working 80 hours per week and the wife was putting in 40 - 50 hours. We had to get it to work or we were going to go bankrupt. Persevere we did. Fast forward 23 years and we have 8 locations and 23 rental properties. I didn't really need the real estate but we felt like we needed to keep investing. Many of our friends are still struggling well into their 50's. Why? They never sacrificed or put the time in to get ahead. One good friend complains that it is her husband's fault they never got ahead - "he never got a good job and is a drunkard". Of course she says this to his face - how do you think his male ego is doing? She works for the school system and gets the Summer off. I offered to hire her during the Summer to help paint rentals but she wanted to sit in her pool. Who does the painting at our rentals? You guessed it, my wife and myself. I figure that we save around $10,000 a year by doing some of the work ourselves. Not a lot of money when I look at our total income. I look at that $10,000 as money that I can put towards paying off the rentals early. More of that sacrifice word.

Has our personal life changed with all the sacrifices? The wife just got a new Corvette which is paid for. She kept wearing the .20 diamond until our 25th anniversary and now has a 1.75 carat diamond instead. We have a fabulous house in St. Louis and a second house in Florida that we go to monthly (One bedroom is an office and I work 7 days a week there as well). I don't mention these things to brag but to try and encourage the young people in the country that YOU CAN GET AHEAD IN THIS COUNTRY but it takes sacrifice. Look up to the people that have gotten ahead and don't be jealous. Befriend them and see how they did it. Oh, they inherited the cash? Move on. They made the money themselves...listen intently!

I hope this "chapter" I wrote above doesn't sound condescending, it is not meant to be. It is some advice that I wish someone had given to me while I was in my 20's.

7 Reply

Account Closed

Investor · Burbank, CA · Member since 2015 · 42 posts · 11 votes

11y

Originally posted by @Katie Douglas:

Hello, I'm a newbie and this is my first post on Bigger Pockets although I have lurked here for several years. While I have been able to find invaluable information on this site, I find many of the posts (especially in the newsletters) to be frustrating because they sound a bit like internet marketing/motivational speak with little realistic or actionable advice although they are supposedly targeted towards young professionals. They tend to underestimate costs/skills needed/and timelines that many people have.

For example, my husband and I are a young professional couple in our mid-twenties. Many of the articles directed at our age group fail to address the following:

- many young people out of college do not have high incomes (median net compensation for individuals in 2013 is about $28k per year) http://www.ssa.gov/oact/cola/central.html; http://time.com/money/3829776/heres-what-the-avera...

- record high student loan debt (average amount of debt for individuals is $26,500 for 2011 graduates) http://www.nytimes.com/2012/10/18/education/report...

- most people are married and/or have children by age 30 (http://www.huffingtonpost.com/2013/11/22/marriage-... http://www.cdc.gov/nchs/data/databriefs/db19.htm; http://www.cdc.gov/nchs/fastats/births.htm; http://www.infoplease.com/spot/momcensus1.html)

- The median American household owes $3,300 of consumer debt (http://www.nerdwallet.com/blog/credit-card-data/av...)

- if you do have a professional job you will probably have to purchase a professional wardrobe (in our case we needed new clothes that were appropriate for cold winters)

- you will probably have to move to where jobs/graduate programs are (moving costs plus potential increase in the COL; see note on buying winter wardrobe)

- increasing rents (http://www.deptofnumbers.com/rent/us/)

-record high prices for cars (http://www.usatoday.com/story/money/cars/2013/09/0...) average price is $31k for new car and slightly used cars are only a few thousand dollars less); most households in the US need at least one car and if you were lucky enough to have one in high school it is probably starting to get old and have expensive maintenance issues by the time you are a young professional.

-record number of people in graduate school (http://www.census.gov/hhes/socdemo/education/data/...) poverty level pay and long hours that discourage people from working a second job during this time

- housing is expensive (down payment plus transaction costs- why do so many posts fail to go into detail about these? My husband and I wanted to purchase the condo we are renting- at a modest price- but the transaction costs doubled the cost of purchasing and we would have only saved $180 per month over the cost of renting. We decided it was better to pay down debt and move to a better location in a couple of years.)

- house hacking; there are not likely very many multi-family units in many towns and if there are they are probably expensive and in undesirable/dangerous parts of town

I am not trying to discredit the usefulness of this site or of investing in real estate. But many of the posts I have read come down to: either the OP majored in a related field in college and worked with other professionals shortly thereafter, had a much higher than average income starting out of college, or had their parents pay for college/weddings/ first mortgages, or the OP is not really young and is already a professional who is looking back at what they wish they did when they were younger (when they had no networks or money).

I think more accurate advice for 20 somethings would be:

- work on increasing your knowledge and income (try to find and fill your skill deficits so that you can be useful to others in the industry and make money; here is something that might be useful: http://www.slate.com/articles/podcasts/negotiation...)

- work on your people and organizational skills

- get your personal finances in shape

- set a realistic time frame for investing (it might take several years to be ready)

- work on getting your SO on board

- build a network of colleagues that you can call on later

- don't buy stupid motivational business books to learn, buy books that focus on specific skills and that have case studies

OR

- have access to specialized knowledge. a large amount of capital, and a professional network, already

- have access to people with those things

Many people go through seismic changes in their lives during their twenties that are not accounted for in these posts. The over simplistic messages I think overshadow the usefulness of the posts. Young professionals don’t need 30 posts with click bait titles to motivate them to become involved, they need to build specific skills and work on their personal finances instead.

This post is really interesting because I am constantly looking back and thinking I wished I had started REI sooner. I do believe the system is set up for people to fail, not specifically just our generation but to anyone in general because there are just so many bad advice out there that don't fit the trend of the world any more. Advice such as you should buy a house and get the interest write off to offset our income, or put money into 401k and trust them with a financial adviser to grow til you retire are just out of date thinking that will never work by the time us 20s/30s retire.

With that said I bought my first SFH when I was 29. I got married last year, bought our 2nd property and will be owning a total of 5 or 6 SFH by the end of this year. We are both college grads who recently paid off our student loans, I also paid extra to get an MFA, and we have one car payment that will be paid off Jan next year. I've owned my car since first year of college and never missed a maintenance so it doesn't need replacing. I don't want to undermine the problems you mentioned in your post, because they are legitimate issues that people are dealing with everyday, but they really just are obstacles. I think the point here is if you are going to have a 9-5 job instead of trying to do hard money flip so you can get cash quickly, assuming you know how to do it right and in the right market, then the real problem is time not money. You've mentioned over and over again that your husband and you are doing everything you can to save and you don't live lavishly, and you are doing your best on debt reduction, then all you really need to do is wait til you have everything paid down to the point where you can save large chunks of your paycheck so that you can put money down as down payment.

I bought a condo when I was 23 borrowing money from my parents. The condo was cheap and the market was right. My parents were gracious enough to give me that loan interest free and I sold the condo last year with a 50% profit. Doing that for the 5 years I've owned the condo lowered my rent to $400 a month, and I was able to pay my parents back and then some after I sold the property. I know not everyone has the luck that I had, but what I was trying to say is that I knew I had to do REI when I was 23, but I didn't actually jump in the game until I was 29 because I simply couldn't afford it. Just because you know this is what you should do doesn't mean you need to start right now. Have a game plan and play accordingly and you will get there.

Also don't undermine the power of working more when you are young. Try to do at least a little bit of that when you are still young to build up a base. When I was doing my MFA, I worked as a bank teller from 8-12, interned from 1-6 and then went to classes from 7-11. I did that for 6 months and my internship got switched over to full time, so I left my bank job and did 9-6 and then 7-11 classes. I got my MFA without debt because I was already working full time and could pay everything as they come. I also graduated from college in 2.5 years instead of 4 because I always took summer classes, so the school was only able to hike my tuition for 2 years instead of 4. Not everything needs to be done in order, things can be overlapped. I am sure there are things you can do now that would have the same affect. Don't give up and get creative and you will get to where you want to be.

3 Reply

Frank Jiang

Investor · San Diego, CA · Member since 2014 · 592 posts · 765 votes

11y

2 Reply

Gilbert Dominguez

Investor · Chicago, IL · Member since 2015 · 677 posts · 309 votes

11y

I think you are quite wrong. Information and examples of real estate investing as presented on this forum, in all the books about investing in real estate, in real estate courses you can attend in college are for everyone who is interested in learning about real estate investing.

It appears to you as though it is geared toward young professionals because real estate investing as a profession in sophisticated and involves allot of knowledge and is further complicated because it is a regulated industry as real estate is considered and is a security.

There is allot of money involved in real estate. There are three things human beings cannot live with out. One is water, two is food, and three is shelter. You may argue that we cannot live without clothes. Granted that may be a fourth thing we cannot live without but our survival does not depend on it as much as the first three. Of course in Alaska you would certainly die if you did not have adequate clothing to protect you against the cold and likewise in extremely hot environments such as the desert.

Cars are certainly complicated, so are buildings and require architects to design them and engineers to assure the buildings will be safe. Streets are complicate and so are most municipal services, bridges etc. but then so is understanding stocks, bonds, mutual funds, options, derivatives etc. etc.

Human beings are intelligent animals and most things in life require a certain level of intelligent understanding and sophistication in and of themselves.

Real estate involves doing transactions, using legal documents, reporting earnings, expenditures, taxes. However, all these things are very much a part of everyday life for any person living in a modern society and in a modern habitat.

Why would you think that a taxi driver would not desire to learn about real estate investing or a janitor or a house maid? The benefits are the same for anyone and everyone who embarks on making real estate investing a strategy to obtain long term wealth and saving for retirement as well as profiting as in any business could do so.

Why is this business being promoted? Why is any business promoted?

We need people to want to get into the business so they will buy memberships, attend meetings, buy our books, buy our cds, pay us to mentor them, be there to listen that we are offering everything free while all the time at every single opportunity let them know that if they want more, the real good stuff of course we have that too, at a price :)

You need cooperation, you need collaboration, you need financing, you need partners, you need every advantage you can get. You need information, you need education, you need to be advised about what areas of real estate investing involve the laws, regulations, government intervention and prohibition.

All this is needed by everyone so if you think that you are something special and that this forum is geared toward you because you are a young professional you are just very very mistaken. Its for everyone.

Have you really been listening to the advise on here but not just here in allot of other forums and books. If you do not have the money then partner up somehow before you attempt to make a deal. If you do not have money then you can try finding deals. If you are a little smart you will not get a house under contract until you know you have back up, do something until you do have the credit to get a good loan etc. etc.

Use your imagination to figure out what you can do until you do have the income, the credit or the money. I know a guy here where I live that does not have credit, or a good income to even a good education and he asked me to give him an idea. I saw he had a truck, a good one so I told him he could go around picking up cardboard and recycling it so he could start to put together a little money. He did that until he got the idea to offer his service to places that have allot of card board that pay someone to pick up the cardboard so not instead of paying someone to take their cardboard they give it to him and he does it free for them while all the time taking the cardboard and selling it at the recycle center. He is putting together about $1,000.00 a month now. The next thing he can do is start to use that extra $1,000.00/mo. is use it to start buying things on credit then build up good credit. Who knows how long it will take him but over time he should build up a good nest egg and have good credit. You see there are a million things you can do. Is he in his mid 20's? No. Is he a professional? No, But could you do this if you were in your mid 20's and were educated or had become a professional? Yes !

Its like anything. Listen, learn, prepare, take what you can use and never mind the rest. take what you can apply and go to work on it. The sooner the better but if your heart is not in it, and if you do not feel real estate investing is for you then put it down. At worse real estate investing will be just one thing more you understand a little.That is part of being an educated human being.

You hate promotion? Car dealers promote their car sales, make up manufacturers promote them miracle products, Pharmaceutical companies promote their medicines, everyone promotes something. Real estate investors promote real estate. Why? Because its in our best interest and because its what we are devoted to.

@Jay Hinrichs. is right and tells it like it is. Of all the people that will try real estate investing only a very few will become successful at it. Once people try it they will find out just how hard and unforgiving it can really be but for those that endure, are persistent, and lucky, believe me we are all lucky and have to be in order to go on in this business but you do your business based on know how, and real knowledge, capacity, abilities and the right set for the most part. Over the years you earn a reputation and build up trust and relationships so it appears to become easier but it never really is you just associate or partner with people you know have a proven track record.

We are trying to help people get started if nothing else with their very first deal. In this business you come to learn that you cannot put all your eggs in one basket and that you need to have several deals going. If you are lucky the majority of them will pay you and on some you will lose. No one I know in this business that has been doing this for several years makes out great on each and every deal. There are just too many variables and things will go wrong. The timing will be off or the market will change or simply you got a house no one wants to buy or no one wants to rent. I have had occasions where I have given houses away free just to get them off of my hands because they did not turn out to be a good investment just lucky I had others that did pay me well and I was able to keep going.

Take the Forex Market( the foreign exchange market) where people buy and sell currencies. That market is 3 Billion or is it trillions or so on a daily basis. There are hundreds of thousands if not millions of people doing it every single day , day in and day out and from 95% to 99% will lose their money. Yes a very small percentage of people are successful at it, maybe a little as 1%.

The reality is the same in real estate investing. Of all those interested and of all those getting started only a small percentage of them will ever last longer than a few years and an even smaller percentage of those will make it over a life time of investing. However, that does not stop real estate investing from being a good deal, a good way to build wealth, and of generating a great passive or a full time income.

It is something you need to build up over the years so yes it makes very good sense if you get started early in your life like in your early to mid 20's. We are not saying its the perfect thing or an easy thing for young 20 something professionals. Are you saying you are you frustrated because we do not concentrate on all the pitfalls?, because we do not stress on the difficulties or dangers? You just hate people presenting only the positive aspects of real estate investing?

Keep up with the times, stay up on the news. There was a story here not long about about a man that lost over one billions dollars, others that have lost millions, and others that have lost their life savings, gone bankrupt, got themselves indebted for the rest of their life or for many years to come all doing real estate deals. Will it make you happy if we concentrate on that? I think we try to cover the basics of deal making and financing on here not telling people what to do after they are already millionaires of billionaires.

1 Reply

Frustrated with Bigger Pocket Posts

Frustrated with Bigger Pocket Posts

Most Popular Reply

109 Replies