20 years old with $50,000, what's the best way to start

Member since 2020 · 6 posts · 1 vote

I've been doing lots book reading and research lately, and I would like to hear some expert opinions. My goal is to grow my wealth as quickly as possible.

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Nathan GesnerBusiness Member

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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

At that age, without a family, I would look at purchasing a four-plex. You can purchase with very little down, live in one unit for free (or almost free), and build some experience as a Landlord. Put the minimum down and keep the rest of your cash for emergencies. One year later, do it again. After one year living in that one, you can purchase a nice duplex with one side being your private home, the other side being a rental, and eight apartments.

At that point, you could probably be financially independent and no longer need to work or you could continue building your portfolio and creating long-term wealth.

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Dan Barli
Attorney · Clifton, NJ · Member since 2015 · 1k+ posts · 328 votes
6y
@Matthew Magruder what strategies are you interested in pursuing?
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Matthew Magruder
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Member since 2020 · 6 posts · 1 vote
6y
@Dan Barli The BRRRR method seems ideal, but I will have a VA loan from the military and theres no refinancing that, I'm pretty sure. Or I would buy a duplex live in one side while I rehab, a little more and rent the other half out untill I'm ready to get another one. These seem to be my go to plans, I'm putting this question out there to see if maybe there's a great idea that I'm missing.
Thanks for the response:)
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Matthew Magruder
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Member since 2020 · 6 posts · 1 vote
6y
@Matthew Magruder but I havent considered house flipping too seriously, I'm lacking allot of research in house flipping and from where I am at the moment, it sounds like a risky investment.
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Steve Graves
Rental Property Investor · Lancaster, CA · Member since 2015 · 103 posts · 55 votes
6y
Your plan to buy a duplex and live in one unit is sound and safe. Fix it up, refi and do it again.
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Matthew Magruder
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Member since 2020 · 6 posts · 1 vote
6y
@Steve Graves do you think it might be harder to rent, with the tenants landlord being their next door neighbor?
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Shiloh LundahlPro Member
Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
6y
@Matthew Magruder I don’t think renting it is the problem. I think that you will be easy access to them for them to let you know what is wrong with the unit and they will want you to do things that normal tenants would do themselves such as replace a light bulb, readjust their cable antena, or adjust the thermostat on the refrigerator.
I am currently house hacking a large home with 7 roommates. It’s really not that bad.
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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
6y
At that age, without a family, I would look at purchasing a four-plex. You can purchase with very little down, live in one unit for free (or almost free), and build some experience as a Landlord. Put the minimum down and keep the rest of your cash for emergencies. One year later, do it again. After one year living in that one, you can purchase a nice duplex with one side being your private home, the other side being a rental, and eight apartments.
At that point, you could probably be financially independent and no longer need to work or you could continue building your portfolio and creating long-term wealth.
The DIY Landlord Book4.7243 Reviews
Website View Page
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Matthew Magruder
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Member since 2020 · 6 posts · 1 vote
6y
@Nathan G. Great answer Nathan I was looking for something out of the box, and an idea I had not previously thought up. This is a good idea for me to take into account. Thankyou
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Erik W.
Real Estate Investor · Springfield, MO · Member since 2017 · 1k+ posts · 2k+ votes
6y
@Matthew Magruder, VA loan, nice pile of cash, and age 20. Any chance you're still in the military? If yes, wait on your real estate investing. You don't want to be the military guy who moves every 2-3 years and leaves a string of single properties all over the country. It will be very difficult to manage those, even if hired out to a PM. "Manage the manager" is a real thing. Airline tickets to check on your investment will cause profits to evaporate on small deals scattered all over.
If not still in the military, I'd start off with something simple like a large house (4+ beds) or a duplex. You can live in one room/side (or not). Personally, I don't like having my tenants next door. When I got into the Army, living in the barracks for 5 months during BCT and AIT cured me of ever wanting to have neighbors one wall over. Some folks have the temperament for it. I don't. "Know thyself," said Socrates.
Good luck!
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Ron Patton
Property Manager · Indianapolis, IN · Member since 2019 · 31 posts · 21 votes
6y
@Matthew Magruder Depending on your location, I would look into a triplex or a fourplex. With the amount of money you have saved up, that should be plenty for a down payment and cash reserves. You could look into an FHA loan or conventional at that price point and obviously depending on your location. I probably would look into the FHA first just so I could put down a lower amount down payment and still have money for expenses/reserves. Try to find a unit that doesn't need much work past paint and carpet. That way you have some room for forced appreciation. Rent them out, live in the other side. If you go the FHA route you'll have to live in the property for at least a year. I do not believe conventional loans have the same mandate but I could be wrong. From there I would just rinse and repeat the process until you have financial independence.
Be sure to hit the ground running. What I would do to be 20 years old again and have the mindset you seem to have. Hope this helps.
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Dan Barli
Attorney · Clifton, NJ · Member since 2015 · 1k+ posts · 328 votes
6y
@Matthew Magruder you should check with a mortgage loan officer about refinancing a VA loan. Your plan to buy a duplex and live in one side seems solid. Just make sure the numbers work for you. And if you can indeed refi a va loan it might make even more sense to use it to buy that duplex, house hack a few years and then refi it to move on.
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Elbert D.
Real Estate Entrepreneur / Investor · Chicago, IL · Member since 2016 · 688 posts · 367 votes
6y
The best way to go in my opinion is to save that and keep building ontop of it. But if your set on getting in real estate ASAP. Ill use a FHA loan on a 3-4unit if its not in a bad area. Aim for a decent area, fix it up a little bit and use a property manager(a good one) to outsource those duties and to help you find good tenants. Find a handyman to make the place look good and bring the rents to market value and to make it look more presentable to good tenants. In the meantime your building equity as well. Hopefully you have started building credit as well. If not you willl need someone to cosign your mortgage as well.
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