Do I bite the bullet and do it?

Raleigh, NC · Member since 2017 · 10 posts · 1 vote

Hey all,

First post here. Been listening to the podcasts and decided to join the forum. Im 26, and sadly only make 20k a year. I have a masters in Healthcare administration, undergrad in international business; however I live in an absolute crap job market and I cannot get hired anywhere.

Im currently living in Wilmington NC. Only moved here because my parents did in 2013. Im originally from NJ where people hustle, theres multiple jobs, and property is 5x more expensive.

Although I only make 20k a year, I invest heavily. (Kinda sucks that people with a job waste their money every weekend while Im on short stack the last 2 years). I have around 25k I can play with for a down payment. In my area, I can get beautiful properties that were built 5-20 years ago for no more than 150k.

In the long run I want to be a real estate investor, I want to own multiple properties, and make passive income through it. My area as I said is cheap, and growing rapidly.

Would you recommend I purchase a property with the money I can play with? Would you recommend single family house vs condo/townhome?

Is what I want to do realistic?

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

@Joe B. forget investing for the moment your whofully undercapitalized.. and you could end up losing whatever you have.

if you want in real estate and your working part time now.. get a RE license cost maybe a grand.. so spend that on education.. get in with a top flight broker on their team.. earn while you learn.. then start saving money.. hang with the club that does deals IE real estate agents.. you will find off market deals before anyone else and you don't have to send or spend money on marketing to get them its all in the club.

short of that take your degrees and energy and move to a better work environment.

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Rory CumminsBusiness Member
Real Estate Broker · Charlotte, NC · Member since 2010 · 59 posts · 41 votes
9y
Hi Joe,
Are you looking to obtain traditional financing through a bank to get the loan? Most lenders will want to see 20% down on an investment. May be tough to buy based on your DTI (debt to income ratio) they'll use based on your 20k income. That said, have you thought to simply buy a primary residence and then house hack? You could qualify for less, need less money down, etc. but could get roommates to help with cash flow and could also decide to rent your property out after a year or two and hold that one as rental. That strategy was exactly what I did when I first started out. I kept my first home as a rental and took my roommates with me to the next primary home I purchased to move in. After a couple years, I moved again and kept the 2nd as a rental (including the 1st). It's a great strategy especially if you don't have a high paying job since it's much easier to qualify for a primary loan (with less down as well) than it is for buying a rental home outright.
As for a single family vs condo/townhome, there are pros and cons to each. Generally, in most markets and areas of a city, single family homes will tend to appreciate better than a condo/townhome. They'll have more capital costs over time as well but then again, you wouldn't have an HOA cost to deal with. I have rentals with both. I'd say it really boils down to what you want more of, appreciation over time or cashflow. You can get both of course but one or the other will have a different balance as will the area you buy in...
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Michael Hayworth
Contractor · Fort Worth, TX · Member since 2015 · 379 posts · 740 votes
9y
Do you have a decent investor community where you are? Is there a group you can get involved with?
This business is hard, and it's getting harder to find good investments. There are lots of signs of a coming correction (BiggerPockets having 4 bazillion members being one of them).
My oldest son is 22. He makes more like $45K/year, so he has more free cash than you do, but not that far off. He saved $10K over a couple of years, and we've partnered on our first deal. He's investing and learning, and I'm doing most of the work.
If there's an experienced investor that you can learn from, and trust, maybe look for a situation where you do legwork and can invest in a portion of one of his deals?
0 Reply
Joe B.
OP
Raleigh, NC · Member since 2017 · 10 posts · 1 vote
9y
Originally posted by @Rory Cummins:
Hi Joe,
Are you looking to obtain traditional financing through a bank to get the loan? Most lenders will want to see 20% down on an investment. May be tough to buy based on your DTI (debt to income ratio) they'll use based on your 20k income. That said, have you thought to simply buy a primary residence and then house hack? You could qualify for less, need less money down, etc. but could get roommates to help with cash flow and could also decide to rent your property out after a year or two and hold that one as rental. That strategy was exactly what I did when I first started out. I kept my first home as a rental and took my roommates with me to the next primary home I purchased to move in. After a couple years, I moved again and kept the 2nd as a rental (including the 1st). It's a great strategy especially if you don't have a high paying job since it's much easier to qualify for a primary loan (with less down as well) than it is for buying a rental home outright.
As for a single family vs condo/townhome, there are pros and cons to each. Generally, in most markets and areas of a city, single family homes will tend to appreciate better than a condo/townhome. They'll have more capital costs over time as well but then again, you wouldn't have an HOA cost to deal with. I have rentals with both. I'd say it really boils down to what you want more of, appreciation over time or cashflow. You can get both of course but one or the other will have a different balance as will the area you buy in...
Thanks for the reply Rory. I have thought about buying a single family home and renting out the other 2-3 rooms as well. That may be a better overall decision.
I have been approved for a loan before since they say my credit score, investments etc.
Seeing youre from NC as well, not having a job here sucks.. I just want a basic entry level job for 5 years, invest, and go from there.
0 Reply
Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
9y
What you should do first is determine your priorities.
If I were you my first goal would be to job hunt a better paying job. To do that you will need to move. That should be priority one. Once you do that you can then begin to invest anywhere in the country that makes scenes, possibly back in Wilmington NC.
Time for you to cut your apron strings, if that is why you are living and working where you are, and join the real world. There is no good reason for you to be living where you are ( Only moved here because my parents did). What is the logic behind that life decision ?
0 Reply
Joe B.
OP
Raleigh, NC · Member since 2017 · 10 posts · 1 vote
9y
Originally posted by @Thomas S.:

What you should do first is determine your priorities.
If I were you my first goal would be to job hunt a better paying job. To do that you will need to move. That should be priority one. Once you do that you can then begin to invest anywhere in the country that makes scenes, possibly back in Wilmington NC.
Time for you to cut your apron strings, if that is why you are living and working where you are, and join the real world. There is no good reason for you to be living where you are ( Only moved here because my parents did). What is the logic behind that life decision ?
I cannot afford to move back to NJ.
Plus my part time job making 20k is one that can/will grow on the side. I enjoy the area Im in, and Im quite stubborn when it comes to jobs. I have an entrepreneurial side to me. All I want is 100k; whether that in 2 or 3 years, then Ill be set to invest.
The real world isnt to get a 9-5 job
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John Smith
Sioux City, IA · Member since 2017 · 13 posts · 2 votes
9y
you will have a hard time getting a loan making 20k a year. Maybe you need to work a less desirable job that pays more for a while
0 Reply
Joe B.
OP
Raleigh, NC · Member since 2017 · 10 posts · 1 vote
9y
Originally posted by @Michael Hayworth:

Do you have a decent investor community where you are? Is there a group you can get involved with?
This business is hard, and it's getting harder to find good investments. There are lots of signs of a coming correction (BiggerPockets having 4 bazillion members being one of them).
My oldest son is 22. He makes more like $45K/year, so he has more free cash than you do, but not that far off. He saved $10K over a couple of years, and we've partnered on our first deal. He's investing and learning, and I'm doing most of the work.
If there's an experienced investor that you can learn from, and trust, maybe look for a situation where you do legwork and can invest in a portion of one of his deals?
Im new to the area, and sadly no experienced investor that I know of.
0 Reply
Joe B.
OP
Raleigh, NC · Member since 2017 · 10 posts · 1 vote
9y
Originally posted by @John Smith:

you will have a hard time getting a loan making 20k a year. Maybe you need to work a less desirable job that pays more for a while
Ive already been approved for a loan before. Was looking to do this a couple of months ago.
That aside, my resume makes me "overqualified" for any less desirable job. Id take anything however.
0 Reply
Teddy Smith
Real Estate Broker · Wilmington, NC · Member since 2016 · 236 posts · 126 votes
9y
30k could get you a property, but you have to consider capital expenditures (HVAC goes out, roof replacement). You're 26, OP. If you have decent credit and this is your first house, I'd consider being an owner occupant for the first year and buying another as you get more into a career.
There's some pretty cheap investments around here, but you gotta watch out cause there's crap too.
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Joe B. forget investing for the moment your whofully undercapitalized.. and you could end up losing whatever you have.
if you want in real estate and your working part time now.. get a RE license cost maybe a grand.. so spend that on education.. get in with a top flight broker on their team.. earn while you learn.. then start saving money.. hang with the club that does deals IE real estate agents.. you will find off market deals before anyone else and you don't have to send or spend money on marketing to get them its all in the club.
short of that take your degrees and energy and move to a better work environment.
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
4 Reply
Joe B.
OP
Raleigh, NC · Member since 2017 · 10 posts · 1 vote
9y
Originally posted by @Teddy Smith:
30k could get you a property, but you have to consider capital expenditures (HVAC goes out, roof replacement). You're 26, OP. If you have decent credit and this is your first house, I'd consider being an owner occupant for the first year and buying another as you get more into a career.
There's some pretty cheap investments around here, but you gotta watch out cause there's crap too.
Thank you Teddy, and its nice to see someone from Wilmington comment. Im going to stay away from the downtown area, as tempting as they are.
Ideally as you said, getting a house and renting it out would be great. I have a few friends from where I work (Hammerheads) that rent, so maybe they could move in with me.
Just to confirm, why would you suggest living there and renting out 1 room vs living at home and renting out 2 rooms? Tax purposes correct?
0 Reply
Justin Tahilramani
Rental Property Investor · Fayetteville, NC · Member since 2014 · 884 posts · 670 votes
9y
@Joe B. - I noticed that you said your job is part time. Any hope for getting hired on full time? 20k/year with a masters degree isn't an ideal situation. Its going to be incredibly hard to get started in RE from a DTI standpoint. I know that a lot of people on BP are gifted with being able to get into RE without significant investment/income, but my experience in RE has shown me that it takes money to make money. A lot depends on your attitude, drive, available time, and ability to network. Jay's advice on becoming a RE agent is a good idea. Great way to get into the industry without having to wait until you can save up enough money to buy a place.
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Joe B.
OP
Raleigh, NC · Member since 2017 · 10 posts · 1 vote
9y
Originally posted by @Justin Tahilramani:

@Joe B. - I noticed that you said your job is part time. Any hope for getting hired on full time? 20k/year with a masters degree isn't an ideal situation. Its going to be incredibly hard to get started in RE from a DTI standpoint. I know that a lot of people on BP are gifted with being able to get into RE without significant investment/income, but my experience in RE has shown me that it takes money to make money. A lot depends on your attitude, drive, available time, and ability to network. Jay's advice on becoming a RE agent is a good idea. Great way to get into the industry without having to wait until you can save up enough money to buy a place.
Yea it sucks. In NJ I had no problem getting a job before I even had a masters. Now that Im here ive only been on 6 interviews in 14 months. I apply nonstop.
That aside, my PT can be full time in the future. Im a soccer coach at a pretty big club here and my income can only grow from what I do.
0 Reply
Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
9y
"I cannot afford to move back to NJ." ..... sure you can, what you are saying is your do not want to.
"The real world isnt to get a 9-5 job". ..... The real world requires you to put your nose to the grind stone to get ahead in life.
You still live at home ????? Cruel to be kind ....all I am hearing is excuses.
As I said you need to get your priorities in order. With your present attitude toward work and money your "entrepreneurial" side is not compatible with your lazy attitude. I do not personally know of any entrepreneur that did not start out working 60 hrs/wk minimum. Usually holding down multiple jobs.
You do not have what it takes to succeed with your present work ethic.
2 Reply
Teddy Smith
Real Estate Broker · Wilmington, NC · Member since 2016 · 236 posts · 126 votes
9y
Originally posted by @Joe B.:

Originally posted by @Teddy Smith:

30k could get you a property, but you have to consider capital expenditures (HVAC goes out, roof replacement). You're 26, OP. If you have decent credit and this is your first house, I'd consider being an owner occupant for the first year and buying another as you get more into a career.
There's some pretty cheap investments around here, but you gotta watch out cause there's crap too.
Thank you Teddy, and its nice to see someone from Wilmington comment. Im going to stay away from the downtown area, as tempting as they are.
Ideally as you said, getting a house and renting it out would be great. I have a few friends from where I work (Hammerheads) that rent, so maybe they could move in with me.
Just to confirm, why would you suggest living there and renting out 1 room vs living at home and renting out 2 rooms? Tax purposes correct?
The main concern is that 25K will get a nice down payment, but it won't let you have a nice "cushion" for mistakes, repairs, closing costs, etc. You could always find a cheaper property, but I wouldn't recommended it here in Wilmington. You want to stay 120K above to stay out of the trash.
Being an owner occupant will allow you to have a %3 down FHA loan that has a super low rate and will put you into nicer investment territory. After you live in it the first year, you can move out (but not have an FHA loan unfortunately) and do the same-thing with another property. And like you mentioned before, you can rent it out to your friends and you many even get some nice cash-flow while you live in it.
This is actually what I'm doing right now as I save up for my next investment (I'm 26 too lol)
0 Reply
John Smith
Sioux City, IA · Member since 2017 · 13 posts · 2 votes
9y
Originally posted by @Joe B.:

Originally posted by @John Smith:
you will have a hard time getting a loan making 20k a year. Maybe you need to work a less desirable job that pays more for a while
Ive already been approved for a loan before. Was looking to do this a couple of months ago.
That aside, my resume makes me "overqualified" for any less desirable job. Id take anything however.
If you were already approved once why didn't you go thru with it? I don't want to be a hater or a troll but at 20k a year, that's like 10.60 an hour. I assume you can find something related to your degree and skill set that pays more. McDonald's pays around 10 here. Like Jay said, get your real estate license.
Can you house hack? Maybe, maybe not. You are currently rent free, and probably food, electricity, etc. even with a house hack I could see your monthly cash flow dip slightly for the above reason
0 Reply
William Walker
Investor · Wilmington, NC · Member since 2016 · 211 posts · 262 votes
9y
I gonna agree with most others here in that 20k/year isn't enough if you're putting all of your 25k into a down payment. Anything goes wrong and you are up the creek. Considering you're working part time your best bet is to pick up something else part time to supplement your income. If you think staying with the hammerheads is going to provide you with the future you want that's fine, but you can't ride out making 20k a year and expect to get rolling in real estate. I'm from Wilmington and there are about a million landscaping jobs that you can pick up and make your same hourly rate with no experience. Stick with a crew for a few months, have a driver's license, show up to work on time, and you'll be in charge of a crew in no time.
If you want to ignore everyone's advice and still purchase a property, look at having your parents as cosigners assuming they have decent credit and a good DTI. Present the numbers to them and pay for everything, they just sign.
I also wouldn't say avoid downtown altogether. There are literally multimillion dollar properties downtown. Avoid Dawson st? Absolutely. But there are good properties downtown. There are also a lot of properties in your price range in the Ogden area which is blowing up.
Most importantly you have to change your attitude towards working right now. The 9-5 isn't the dream, but it's how you get there. You're gonna have to grind a bit before you're making 100k off rental properties.
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Joseph Hennis
Fairfield, CA · Member since 2017 · 98 posts · 84 votes
9y
The biggest thing is to educate yourself. Books from the library. RE classes (can even get a RE license). BP podcasts. etc. Whatever you can do to get more education. Your situation is not insurmountable with the right strategy.
Have you considered doing some flips? Find a wholesaler in your area (or do your own mailings) to find you a property well under ARV. Use your cash and hard money, or other private investors, to fund the flip. Use the profits from the flip to fund more flips and long term rentals. If you are doing the BRRRR strategy you can use the rent from the property to qualify for the conventional loan and your income doesn't need to be that big.
My wife and I did plenty of investing on just her income of 35k at the time. We could qualify for a 150k conventional loan for our own house, but it didn't matter for the rentals because the rent is used to qualify for the loan.
0 Reply
Joseph Hennis
Fairfield, CA · Member since 2017 · 98 posts · 84 votes
9y
I would really look into BRRRR (Buy, rehab, rent, refinance, repeat). It makes a lot of sense in your situation. With your income, you could probably qualify for 100k conventional loan. Buy a property for 50% of ARV with hard money, fix it up, rent it out. Then refinance it to take your money back out of the property.
0 Reply
Account Closed
Investor · Wilmington, NC · Member since 2016 · 80 posts · 43 votes
9y
You might reach out to my friend @Rachel De Faut. She is a RE agent/broker and also a property manager in Wilmington. She might be able to use a motivated part-time employee interested in Real Estate. You can get some real world experience cleaning, painting, maintaining rental properties. See if it's really what you want to do. She's also very experienced in selecting the best of inexpensive rental properties in that market. If you have any skills, it would probably quickly pay better than what you're doing now.

As to advice on how to proceed, I'm in the house-hack camp if your job is stable. Buy a house with a mortgage you're interested in living in. Then get roommates. After a year, you can move out, either leaving the roommates or bringing them with you to the next place.

Some suggest an FHA mortgage with low down payment, but I think the higher monthly payment would make qualifying difficult with your low income. I'd go in with 20% down and go for a mortgage you'd hold long-term. I like the PenFed 5/5 ARM if you can qualify for it. Low monthly payment, and last I checked even in the worst case scenario it was cheaper than a 30-year fixed for the first ~13 years out. Quickly bankroll an emergency fund in case something unexpected comes up.

Alternately, you could also instead focus on a proper career job in your field. Work full-time on finding that job and you will find it.

Good luck!
Joe
2 Reply
Joe B.
OP
Raleigh, NC · Member since 2017 · 10 posts · 1 vote
9y
0 Reply
Joe B.
OP
Raleigh, NC · Member since 2017 · 10 posts · 1 vote
9y
Originally posted by @Teddy Smith:

Originally posted by @Joe B.:
Originally posted by @Teddy Smith:
30k could get you a property, but you have to consider capital expenditures (HVAC goes out, roof replacement). You're 26, OP. If you have decent credit and this is your first house, I'd consider being an owner occupant for the first year and buying another as you get more into a career.
There's some pretty cheap investments around here, but you gotta watch out cause there's crap too.
Thank you Teddy, and its nice to see someone from Wilmington comment. Im going to stay away from the downtown area, as tempting as they are.
Ideally as you said, getting a house and renting it out would be great. I have a few friends from where I work (Hammerheads) that rent, so maybe they could move in with me.
Just to confirm, why would you suggest living there and renting out 1 room vs living at home and renting out 2 rooms? Tax purposes correct?
The main concern is that 25K will get a nice down payment, but it won't let you have a nice "cushion" for mistakes, repairs, closing costs, etc. You could always find a cheaper property, but I wouldn't recommended it here in Wilmington. You want to stay 120K above to stay out of the trash.
Being an owner occupant will allow you to have a %3 down FHA loan that has a super low rate and will put you into nicer investment territory. After you live in it the first year, you can move out (but not have an FHA loan unfortunately) and do the same-thing with another property. And like you mentioned before, you can rent it out to your friends and you many even get some nice cash-flow while you live in it.
This is actually what I'm doing right now as I save up for my next investment (I'm 26 too lol)
Great Idea and thank you for the response. Any areas youd recommend? Near UNCW? Areas to avoid? Im new here so still getting used to what may be considered good vs bad
Im unsure how to multiquote, but I appreciate everyones responses.
0 Reply
Teddy Smith
Real Estate Broker · Wilmington, NC · Member since 2016 · 236 posts · 126 votes
9y
@Joe B.
Rosemont, Kings Grant, Greenway Village, Pine Hills (the one near UNCW), and Belmont are all my favorites.
I'd avoid downtown really, but that's just me. Too much speculation, lots of crime, poor appreciation.
All of those are predominantly near the university except for Belmont. Belmont has a huge amount of duplexes and is really popular with investors.
1 Reply
Rolanda Eldridge
Investor/Realtor · Hoover, AL · Member since 2010 · 1k+ posts · 459 votes
9y
@Joe B...Welcome to BP..A great Resource..Do it!!!
0 Reply
William MurrellPro Member
Investor · Wilmington, NC · Member since 2013 · 276 posts · 169 votes
9y
+1 to house hacking. Pretty much your best option. I'd be interested to see how you got pre-approved for a loan on a 20k w2. Credit score and investments are nice, but there still has to be income and you don't appear to have it.
There's a lot of good advice in this thread, but I'd like to add some more. Your best bet when it comes to finding good, quality advice is to solicit it from people who are making it happen in your geographical area since REI is so local. However, as someone who was born and raised here in Wilmington and now invests here, I can say that the first thing I noticed is that the majority of your comments are very negative about the area. Which doesn't really inspire those of us who work and invest here to want to help. In particular, I can't help but notice the comment about how you're from NJ "where people hustle," as if people don't in Wilmington. Since 20k a year is about half of the median income for this area, I'd say you're not hustling. I'd recommend you take another side job or perhaps switch careers entirely to get your reserves and income up to get the ball rolling. You can certainly invest with little or no money down, but it definitely helps to have more seed money.
I notice you also mentioned "no experienced investor I know of." There's a local REIA full of investors. And there's a ton of us locally who buy and hold, flip, etc. I think you've decided the area stinks before really doing your homework.
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