Boston, MA · Member since 2018 · 48 posts · 22 votes
Hi Everyone,
My name is Olivia, I'm 24 y/o and a 2016 grad from Penn State. I'm a lifelong resident of Boston and I'm looking to start investing in the next year or two (not in Boston, but surrounding and more affordable areas) but I'm trying to figure out a strategy and plan. I work a full time job and a part time job and have good credit. Currently living at home to save money while paying for student loans, car note, car insurance and other bills. I've heard a lot of different opinions outside of BP but I wanted to ask for some advice. Some people say "don't wait until you have the perfect amount of money saved, just dive in!" and others say "make sure you are somewhat financially stable before you buy your first property." I am a bit overwhelmed/lost on what I should do and what makes more sense right now given my financial responsibilities.
If anyone has any advice or would like to share their own personal story of how they got started in a similar situation it would be greatly appreciated!
Investor · Memphis, TN · Member since 2013 · 741 posts · 845 votes
8y
I think people that tell you have to have your financial situation together are giving good solid advice from a conservative point of view. Some of us though, are a little more comfortable with risk and will tell you to jump right in. When I was starting out I had “0” money saved, no reserves, no plan except I knew that I wanted to own real estate. I bought our first rental creatively with none of my own cash. I owned that rental and literally used the cash flow to build up a reserve account. So neither strategy is right or even better than the other it boils down to who you are and your risk tolerance. If something had gone wrong in the first year of owning my rental I would have been in trouble but with the same breath I would say, I was laser focused and I would have figured it out and if you decide to jump in so will you! I think what you really should be thinking about is who you are are you aggressive and want to throw all your chips in? Or are you more reserved and methodically and want to patiently start to invest? Both ways work! It is important however that you still know how to analyze deals and buy only GOOD deals because neither approach works if you buy bad deals! Just my two cents! Good luck and happy investing.
Rental Property Investor · Salem, NH · Member since 2016 · 460 posts · 276 votes
8y
I would definitely get my financial situations straightened out first. Save up for a down-payment/closing costs/rehab, pay down your debt, get your DTI (Debt to Income) ratio at a good level so obtaining financing will not be an issue.
Do not go bankrupt on your first deal, have an emergency fund in place.
I think it's crazy to jump in without working on the above first. Take your time, you have it on your side.
Best of luck. PM if you have any questions, I'm 25 and house-hacking.
Realtor · Boston, MA · Member since 2017 · 187 posts · 40 votes
8y
Welcome @Olivia Umoren! I also live and work just outside of the Boston area and would be happy to talk with you more about what you are looking for and answer any questions that you have, just send me a PM.
I also agree with @Steve DellaPelle in making sure you are financially stable enough and comfortable with the process and any unexpected expenses.
Investor · Boston, MA · Member since 2014 · 232 posts · 165 votes
8y
@Olivia Umoren Welcome to BP and nice to hear from another Boston based investor! It sounds like you're on the right track - living at home to cut costs and paying down your bills. I think we would all need to get more specific before answering any tactical questions, but congrats on getting started and hope all works out for you!
Lansing, MI · Member since 2015 · 301 posts · 149 votes
8y
@Olivia Umoren - Welcome! It's awesome that you're thinking about your future early - a lot of our peers don't!
I bought my hose hack duplex while still having student loans to pay off, car payment, credit cards. It just made too much sense not to. I actually refinanced my vehicle and pulled cash out and got a 0% interest credit card to fund my rehab of the rented unit. :).
I think that either - buying a duplex and living in one side and renting out the other, or buying a single family house and renting rooms out is a great way for you to get started.
You may do it and decide that you don't want to do anymore rentals and venture into something else like I did! But taking the action will help lead you to where you want to be.
I started with a house hack- I think it took a good couple of months before I was ready to see properties. Smart you have a FT and PT job-
I think you should essentially dive in.. but not make a "bad purchase" , since you can't win on the sidelines
You absolutely want to have reserves when you invest, it would not be smart to have limited capital since if you have a major repair, you will be in trouble.
Investor · Memphis, TN · Member since 2013 · 741 posts · 845 votes
8y
I think people that tell you have to have your financial situation together are giving good solid advice from a conservative point of view. Some of us though, are a little more comfortable with risk and will tell you to jump right in. When I was starting out I had “0” money saved, no reserves, no plan except I knew that I wanted to own real estate. I bought our first rental creatively with none of my own cash. I owned that rental and literally used the cash flow to build up a reserve account. So neither strategy is right or even better than the other it boils down to who you are and your risk tolerance. If something had gone wrong in the first year of owning my rental I would have been in trouble but with the same breath I would say, I was laser focused and I would have figured it out and if you decide to jump in so will you! I think what you really should be thinking about is who you are are you aggressive and want to throw all your chips in? Or are you more reserved and methodically and want to patiently start to invest? Both ways work! It is important however that you still know how to analyze deals and buy only GOOD deals because neither approach works if you buy bad deals! Just my two cents! Good luck and happy investing.
Rental Property Investor · North Andover, MA · Member since 2018 · 107 posts · 72 votes
8y
@Olivia Umoren You have the right idea! Boston and the towns around it are very difficult to find good deals, especially if you're hoping to be in southy. Not many people like to own in Lynn, but there are good deals there. After that, central mass is the place to look!
Keep in mind the majority of indivulaes wishing to get into real estate investing never do. It is high risk, hard work and long hours to a slow growth of wealth. Additionally may will fail for a variety of different reasons. Being well educated on finances as well as real estate investing itself is essential to success.
It is no different in many respects from buying a car. You must be able to not only cover the payments but have access to reserve funds to do the repairs. If your other financial responsibilities in life are too demanding realistically you do not have the ability to take on more financial debt even if it is income producing.
Investing is high risk. Ask yourself if you are prepared to lose everything if something goes wrong. When you have all your financials and educational ducks in a row and the answer to that question is YES then you are maybe ready to begin.
That's awesome you're thinking about this early! I think it's best to get your self financially stable, if I were you, I'd be saving like crazy for a down payment for a duplex and house hack! In the meantime, go to your local REI meetings and talk to people, and see about finding a mentor. A mentor will help you immensely, and if what you have now is time, offer to help them for free! Also, work on your credit and make sure you have a great score so when you do go to the bank, it will be an easy approval!
Boston, MA · Member since 2018 · 48 posts · 22 votes
8y
@Linda S. Thanks for your comment and advice! I have a mentor now but we don't live in the same state so I'll definitely be looking for another one that is more local. Thanks again!
Boston, MA · Member since 2018 · 48 posts · 22 votes
8y
@Patrick Hermans Thanks Patrick! Yes, I know Boston is just too expensive for me to even look at. My dad is a contractor and he works on properties in Boston and sometimes he shares with me the prices of these homes and condos and it's SO MUCH. I think I need to do some research on what areas would be a good fit. Being a lifelong city girl, I don't think I would enjoy living in central MA but I could definitely look into it as a place to purchase property that I'm not living in. I heard Worcester has some good deals, what are your thoughts on that?
Boston, MA · Member since 2018 · 48 posts · 22 votes
8y
@Stephen Akindona Thanks so much for your comment. Do you mind me asking how you were able to use none of your cash? I am a very resourceful person so I actually enjoy finding different ways for doing something. The aggressive vs conservative is something I'm still figuring out for myself. I think once I figure out how I want to go about it, it'll be easier for me to make a solid plan for myself.
Investor · Memphis, TN · Member since 2013 · 741 posts · 845 votes
8y
Hey @Olivia Umoren, I don't mind at all! My first deal was a house I paid 50k for in Memphis. The house was rented for $950 and was worth 103k. I had done a lot of marketing to try and find deals and a wholesaler actually brought me this deal. I went to several meet ups in town and meet a hard money lender who gave me the 50k. I actually borrowed $53,700 which included my $1,000 closing cost and 5pt loan origination fee. I then refinanced it with a permanent lender. The bank would loan me 75% of appraised value, which in this case was $77,250. Well the refinance cost me about $6,200. So I was all in this home at $59,900 ($53,700 + $6,200). So I refinanced at $59,900. Paid my hard money lender back his money and now I owned the property with a 30 year mortgage in place at $59,900. It cost me absolutely nothing to do this. The $6,200 also included my one month interest only payment with the loan. The lender charged me 12% so I did make a 1% payment, but that was all still part of the deal. Every rental that I currently own now with the exception of 3 of them I bought using this no money down strategy. It is called the BRRRR strategy here on BP. You can search the forums to read more about it!
Rental Property Investor · Walla Walla, WA · Member since 2016 · 480 posts · 346 votes
8y
@Olivia Umoren, first let me congratulate you on taking the step towards recognizing that RE is a GR8 investment if done wisely. Full disclosure: I am fairly new myself so the folks above my post here it would appear have given you some solid advice, I couldn't agree more with @Stephen Akindona, it comes down to what works for you. But also @Linda S. makes an extremely good point, in the mean time, stay extremely engaged in surrounding yourself with like minded REI individuals as this will continually remind you and motivate you to stay accountable to your WHY you are doing this. So regardless of what strategy or niche, jump in now, save and get in later, just stay the course and give a lot of thought as to what you want out of this and if you want it bad enough trust me you will find a way to make it work. Best of luck to you and keep us posted as to your progress. Here is to wishing you success in your 2018 REI ventures!
Rental Property Investor · Gulf Breeze, FL · Member since 2014 · 1k+ posts · 733 votes
8y
Figure out your WHY @Olivia Umoren. Once you figure out your why, the reason you want to invest in real estate, then goal setting becomes easier and from those goals you'll set investing criteria (your bumpers) to guide you through REI.
Appraiser · Brooklyn, NY · Member since 2018 · 106 posts · 118 votes
8y
Hey fellow young aspiring investor!
I agree with the other commentators on this thread so far. There is probably no "perfect amount" of money to have saved up before you buy a property. I am a fan of @Stephen Akindona's method of creative financing and that is how I personally want to start buying real estate. I do not want to be completely beholden to the federal reserve in this time of rising interest rates.
But I do agree the first step is getting your mind right. Rich Dad, Poor Dad and The Richest Man in Babylon are great reads about personal finance. Pay yourself first to ensure you are saving as much as you can, then pay off your debts and support your lifestyle each month. Run your life like a business so that you are in the habit of being responsible and resourceful with money and it will be easier to buy property and run your investing business successfully.
I would say if you see the right deal take action. Always be networking and telling people about your interest in real estate and hopefully the right team members for you will come alone. Good luck! :)
Boston, MA · Member since 2018 · 48 posts · 22 votes
8y
Josane Cumandala thanks for your comment! I actually just finished reading RDPD and have started Cash Flow Quadrant. Right now I’m trying to build my education foundation but I also want to have a plan for myself so I can start meeting goals. I think I’d do well with creative financing but I just have to read a lot more before jumping into that. Once I fully understand the financial aspects of REI I think it’ll be easier for me to make a decision
Boston, MA · Member since 2018 · 48 posts · 22 votes
8y
Mike Hurney In 1 year (by fall 2019) Id like to purchase my own property and house hack. In 5 years I’d like to own 3-5 multi family homes or 2-4 unit properties. In 5 years I should be in my professional career so I’d want to hire a property manager for the properties. I’m applying to masters programs for a fall 2019 start so if I get into school here I would buy here or if I go out of state I’d buy there she plan to stay and work there for a few years
Josane Cumandala thanks for your comment! I actually just finished reading RDPD and have started Cash Flow Quadrant. Right now I'm trying to build my education foundation but I also want to have a plan for myself so I can start meeting goals. I think I'd do well with creative financing but I just have to read a lot more before jumping into that. Once I fully understand the financial aspects of REI I think it'll be easier for me to make a decision
I feel you! One of the best books I've read so far on creative financing is a short little volume called Owner Will Carry Jack Miller. There are also a lot of great real estate podcasts :)
Real Estate Investor · Boston, MA · Member since 2009 · 2k+ posts · 542 votes
8y
@Olivia Umoren Are you working in the field where you received your degree?
Working in the field where you will be getting your masters?
I think your employer should be paying for any advanced degrees Unless you're in medicine or law where an advanced degree is necessary. by the bye Honeywell paid for my MBA but I paid for my Engineering degree when I started.
Boston, MA · Member since 2018 · 48 posts · 22 votes
8y
Mike Hurney My degree is in nutrition and my career goal is to be involved in global health research and field work. Right now I’m basically working in the medical field just not in my specific field of interest. I work in a hospital and they provide tuition assistance (max $2,000) but they don’t pay for degrees unless it’s a specific degree from a school they have a relationship with. I know they offer many scholarships so I’ll be looking into that this year. Thanks!
Real Estate Investor · Boston, MA · Member since 2009 · 2k+ posts · 542 votes
8y
@Olivia Umoren 'global health research and field work...."? You may want to check out WaterMission.org I tried to connect with them in PR but we were both too busy with other projects. I ended up bringing generators to the cathedral in Old San Juan and they knew exactly who needed them!
However, Real Estate Investing.
You may not want to get "over educated" for this. For every 1 hour of studying you need at least 5-10 hours of field work. Get out there NOW!