22 years old... Where do I start?

Question

Hi everyone! My name is Colton Roan. I am 22 years old and live in the small town of Elmira, NY. You probably have no idea where that is or know of the fact that Samuel Clemens (AKA Mark Twain) lived and died here. Where you may have heard of is either Corning, NY (Home of Corning Inc.) or Watkins Glen, NY (Wine and NASCAR Racetrack). I'm about 45 mins from either of those towns! Besides those attractions not much goes on in our small town. I am completely debt free and have minimal expenses due to my girlfriend and I budgeting and being very thoughtful on what we spend our money on! Besides work and doing CrossFit we both read a lot and try to keep spending to a minimum. We both are wondering what our next steps in life should be.

Recently the idea of passive income and having money work for me instead of myself working for it was brought to my attention. A specific author many of you probably know of wrote a certain book that I read you may have also read yourselves is the culprit of this! You guessed it... the one with two dads! Rich Dad Poor Dad!! After reading this book I have picked up a couple of Robert Kiyosaki's other books and have begun to speak with some locals in my area who flip houses or own many properties themselves. You could say that Rich Dad Poor Dad got me Hook Line and Sinker with the idea of passive income! The idea of eventually working with who I want and being able to weave my way through all of the noise and become financially independent has me obsessed! I am so eager to learn everything and anything about finances and money in general that I dying to know what I should make my plan of attack for the next 5-10 years! I currently have about $5,000 saved up that I am wondering what to do with to start my pipeline towards a passive income through real estate in the future. Any advice is welcomed! Thank you so much for reading!

Stephanie Jacobson · Answer

Hi Colton! I live in Ithaca, but I cover Elmira/Corning and Watkins Glen. :)

I agree with @Denzel Ray- going with an FHA-type loan and house hacking in a multi family is a great way to start. Be careful with FHA though; some lenders require you to pay PMI for the life of the loan. Give Tioga State Bank a call. They have really great first-time homebuyer programs, and they do rehab loans.

Stephen Matusick · Answer

Colton, I'm down the road from you in Caton. Let's talk and we can bounce ideas off each other on how the environment in upstate NY really is for REIT.

Jason Martinez · Answer

All very good advice listed above. @Colton Roan I have no idea what the market is like in Elmira, NY considering I live in Southern California.

I work a minimum wage job there is/was no way to get approved here in California even for a 2bed 2bath $205k condo that I planned to house hack with a FHA loan. I do, however, know how to save money. I am 26 years old purchasing my first buy and hold in Indianapolis... Long story short if the market in your hometown doesn't make sense to you look elsewhere that does make sense to you. To do this and invest in general take in all the FREE education you can: Listen to podcasts, network, and read books, for example "Long Distance Real Estate Investing...." by David Green is actually free on Audible through Amazon, if you have prime.

I am not a seasoned investor, but I am a millennial as yourself looking to do just that. Feel free to contact me and I will answer as many questions as I can. Good luck!

Stephanie Jacobson · Answer

@Jalen Johnson @Denzel Ray My understanding is you can use FHA again if you haven't had your name on a deed for 3 years. Not exactly practical for high-volume or even medium-volume house hacking, as Denzel says. Some lenders offer conventional loans for 5% down so you can use those again after, as they don't require you to be a first-time buyer. The limit is typically that the building must have four units or less. (Five an above is commercial, and then you get into 20-25% down.)

Matthew Stoutenburg · Answer

Hi @Colton Roan!

I would echo listening to the BP podcast and reading the articles on the site. Elmira is a great opportunity for house hacking duplex/triplex between the university and hospital. Send me a pm some time. I would be happy to connect.

Denzel Ray · Answer

@Colton Roan

You could get a FHA loan and purchasing a multifamily residence (duplex, triplex, or quadplex) live in one of the unit for the first year because it’s require with an FHA loan, and rent out the other units. That get you experience at land lording and all the other bells and whistle that come with real estate investing all for only 3.5% down with a FHA loan.

Of course doing more research and reading more books so you be a good land lord so you don’t ruin your investment bad having bad tenants in your property. That’s just one way you can get started fairly easy with no money down or can save more money and also do more research as well.

Jalen Johnson · Answer

@Denzel Ray Great advice! That’s what I have in mind to get started as well. Can you continue to repeat the process of using the FHA loan and house hacking with 3.5% down? I’ve read some forums/listened to some podcasts that say you can and some that you can’t I’m looking for some clarification. Thanks in advance!

Jalen Johnson · Answer

@Colton Roan I highly recommend reading How to Invest in Real Estate by Brandon Turner and Joshua Dorkin! Great read and intro to investing!

Denzel Ray · Answer

@Jalen Johnson you can only have one fha loan at a time so your first property you use the loan on you will have to refinance it to a conventional loan, and i know you can use a fha loan again but you have to wait a few years i cant remember how long but even if its 1-2 years you have to wait to be eligible to apply for a FHA loan again. I'ts not sufficient if you really want to grow wealth buying 1 property every few year plus you have stay in the property for another year again to use the fha loan so moving out one multifamily into another one every few years or so.

Ideally you want to find a good deal on that first multifamily property that cash flow very well even while your staying in one of the unit that first year and the smart thing to do is pay your self that same amount of rent your charging the other unit put it up towards saving for the next property along with all the cash flow and you can put 20-25% down with conventional or commercial loan.

22 years old... Where do I start?

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