150k cash, 21 yrs old, what do i do?

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150k cash, 21 yrs old, what do i do?

Kyle Knowles
Flipper/Rehabber · Dover, NJ · Member since 2020 · 11 posts · 4 votes

I am 21 years old and live in Morris County, NJ. Morris County has the highest median housing prices of the entire state, and some of the highest taxes in the country. I have 150k cash, and would like to eventually go into multi-family unit buildings. I have yet to make my first deal, but I’ve been educating myself as much as I could. Any ideas?

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Caleb Brown
Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
5y

I would advise to house hack a 4plex to learn the basics and it's so cheap to start. Then scale up to multi after you have your feet wet. After the house hack it's up to you, you can.... purchase a multi by yourself with your funds, partner on a deal, go into a syndication, etc

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  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    5y

    I would advise to house hack a 4plex to learn the basics and it's so cheap to start. Then scale up to multi after you have your feet wet. After the house hack it's up to you, you can.... purchase a multi by yourself with your funds, partner on a deal, go into a syndication, etc

    3Reply
  • Josiah Willis
    Investor · MI · Member since 2020 · 17 posts · 4 votes
    5y

    I'm 20 myself starting from a much more humble position (as far as cash goes) but I had to get creative. Once you feel like you've learned enough to "speak the language" so to speak I would begin building the connections for your "team". Go on BP or your local REI (which you should already be doing) If you haven't already, decide your sub-market and look for property managers, agents (who will be investor friendly because that the group your in) and others. Tell them what you want to do and leverage these connections to help you execute on your plan!

    0Reply
  • David Kiszka
    Real Estate Agent · Albany, NY · Member since 2017 · 55 posts · 21 votes
    5y

    @Kyle Knowles As others have said house hacking a great way to get started even if you have more starting cash then most first time home buyers. If your area does not have a large amount of 2-4 unit properties on the market right now, you can also buy a single family home in an area with good appreciation and rent the rooms out. This will give you experience as a landlord and get your foot in the door for the investment property business. When you are ready to make another deal you can hold onto the house as a single family rental or sell and roll into another property. Best of luck and feel free to reach out if you have any questions. 

    0Reply
  • Bill HamptonBusiness Member
    Accredited Investment Fiduciary, AIF®, Financial Planner, Tax Strategist, Real Estate Investor · Atlanta, GA · Member since 2012 · 2k+ posts · 977 votes
    5y

    Kyle, 

    Welcome to Bigger Pockets. Bigger Pockets is a great place for education and networking. 

    I recommend that you check out the following resources:

    1. Start by reading the Ultimate Real Estate Investing Guide: https://www.biggerpockets.com/guides/ultimate-real-estate-investing-guide/introduction

    2. Check out other online guides available here: https://www.biggerpockets.com/guides

    3. Take a look at BP's blog where new articles are published every day: https://www.biggerpockets.com/blog

    4. If you want to network or ask specific questions about your local market, go to your local real estate forum and connect with investors from your area: https://www.biggerpockets.com/forums/86-local-real-estate-networking

    5. You can meet local investors by registering to attend real estate events in your area: https://www.biggerpockets.com/forums/521-events-and-happenings

    6. BP has various tools to help you analyze your deals (rentals, flips, wholesale, etc). : https://www.biggerpockets.com/investment-calculators

    7. If you can't find what you're looking for, try the Bigger Pockets Fileplace. It contains hundreds of files such as ebooks, checklists and spreadsheets for real estate investors: https://www.biggerpockets.com/files 

    8.Set up keyword alerts to be notified of the topics that interest you: http://www.biggerpockets.com/alerts

    9. Join your local real estate investors association.

    Good luck investing.

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  • Mack BensonPro Member
    Rental Property Investor · Woodbury, MN · Member since 2018 · 299 posts · 299 votes
    5y

    Welcome to BP!

    When I hear someone say that they eventually want to get into multifamily apartments the first question in my mind is why eventually. Why not go straight to your goal? If you are absolutely certain that multifamily is what you want to do then is there anything you can do to go from where you are to where you want to be?

    Remember, you don't need to buy close to where you live, you can invest anywhere that makes sense. If you are dead set on investing close to you, can you expand your search area to an hour radius? Does that provide more opportunities?

    Networking is key in this business. With 150k you may be able to purchase a property around 750k by yourself but if you find a partner then you may be able to take down something even larger. Go to networking events and attend meetups in your area. Many of these have gone virtual so you may be able to go to some that are even outside your area.

    Another thing you may be able to do is invest in syndications. If you are non-accredited you will only be able to invest in 506(b) offerings and to do that you will need a pre-existing relationship with the sponsor before they find a deal. Many sponsors have a minimum investment of 50k so in theory you may be able to deploy that 150k into three deals. 

    Of course you need to do your due diligence on all of these and be sure you are educated. There are books on these topics in the BP bookstore that may help if you are interested.

    Good luck!

    2Reply
  • Jesse Daconta
    Rental Property Investor · Newport News, VA · Member since 2018 · 264 posts · 130 votes
    5y

    @Kyle Knowles

    I agree with @Mack Benson

    People believe they need to start small. If you know what you want, go for it. If you want to invest in multifamily, I recommend you rub elbows with champions at your local real estate investor association (REIA). Provide value to them and expect nothing in return.

    Best,

    2Reply
  • Stone Saathoff
    Investor · San Antonio, TX · Member since 2019 · 576 posts · 307 votes
    5y

    I would probably suggest a lighter rehab BRRRR somewhere within driving distance of your current location.

    This method provides some of the best returns, easiest to run numbers on, largest buyer pool when it comes time to exit, and also the easiest to manage and start off with since it's just one door.

    I personally began my foray into real estate investing at 22 by doing major rehab house flips in San Antonio, but that is mainly due to a love for restoring older homes, and not having a long enough self employment history yet to qualify for long term investment loans.

    0Reply
  • Andrew HoganPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2016 · 559 posts · 463 votes
    5y

    @Kyle Knowles, congrats man, that's a real achievement! I'd say not to place that hard-earned cash until you've educated yourself well enough that you're no longer asking what to do with it.
    Remember that multifamily is a team-sport so partnering with the right team is essential if you want to succeed.

    Keep hustlin! 

    1Reply
  • Reece Iovine
    Realtor · Columbus, OH · Member since 2016 · 170 posts · 227 votes
    5y

    Don't over analyze it. Buy that first deal. If you have to buy oos. I love columbus ohio because prices are more affordable and offer cashflow and appreciation. I bought my first duplex in 2018. It was an on market deal. It is appreciating but pretty much cashflows break even. But that doesn't matter, your first deal won't be a home run but it will get your feet wet. You will learn a ton and can continue to improve deal after deal!

    1Reply
  • Brock Mogensen
    Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes
    5y

    Continue the education process and start looking at deals to get an idea of what's out there.  If you decide to buy out of state, begin due diligence on some target markets. If you decide to buy in your backyard, house hacking is a great way to start. 

    1Reply
  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    5y
    Originally posted by @Kyle Knowles:

    I am 21 years old and live in Morris County, NJ. Morris County has the highest median housing prices of the entire state, and some of the highest taxes in the country. I have 150k cash, and would like to eventually go into multi-family unit buildings. I have yet to make my first deal, but I’ve been educating myself as much as I could. Any ideas?

     You could look to invest out of state. A lot of people from California, New York, etc are investing here in Columbus, Ohio with success.

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  • Steven Foster Wilson
    Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
    5y

    @Kyle Knowles if I were you Id buy a $100k car, and use the other $50k to live for two years. It'll be the fastest two years of your life!

    Or you could come invest in Columbus OH

    0Reply
  • AJ ShepardPro Member
    Real Estate Syndicator · Portland, OR · Member since 2014 · 453 posts · 312 votes
    5y

    @Kyle Knowles

    House hack a 4 plex to start. With FHA financing and your 150k you'll be good to start. This will get you the most leverage the quickest. For even more, get a value add and fix up unit by unit.

    Underwrite the deal after your PMI goes away. You will learn a ton while you do it and be set to take on the next one after you are done.

    2Reply
  • David Lilley
    Rental Property Investor · Dallas, TX · Member since 2016 · 261 posts · 170 votes
    5y

    @Kyle Knowles I'll reiterate what many have already said. If you want to be active in this business, buy a duplex/quad that needs some work and live in one unit. BRRRR. Learn property management, accounting, construction, etc.

    Maybe you don't want to have an active role or the local real estate is just too cost prohibitive? Come talk to me about syndication. 

    0Reply
  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    5y

    Buy a Porsche and get it out of your system.

    If you can really get together $150K on your own at 21, getting funds shouldn't be hard.

    0Reply
  • Zeke ListonBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes
    5y
    Originally posted by @Kyle Knowles:

    I am 21 years old and live in Morris County, NJ. Morris County has the highest median housing prices of the entire state, and some of the highest taxes in the country. I have 150k cash, and would like to eventually go into multi-family unit buildings. I have yet to make my first deal, but I’ve been educating myself as much as I could. Any ideas?

     I would buy a cool car. 

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  • Cheryl Schuck
    Real Estate Agent · Parsippany, NJ · Member since 2013 · 186 posts · 71 votes
    5y

    Hi Kyle, with the market as tight as it is in your area I would recommend branching out a bit further west or looking for funding options to make up the difference in purchase price.

    I would be happy to discuss areas and options with you depending on what you want to accomplish with your first property.  Feel free to reach out.

    0Reply
  • Wei Li
    Investor · Member since 2019 · 4 posts · 0 votes
    5y

    How do I get my feet wet with syndications, I want to do my due dilligence but need to the resources How do I find my local real estate association (REIA) group on this website

    Thanks a lot

    0Reply
  • Wei Li
    Investor · Member since 2019 · 4 posts · 0 votes
    5y

    How do I get my feet wet with syndications, I want to do my due dilligence but need to the resources How do I find my local real estate association (REIA) group on this website

    Thanks a lot

    0Reply
  • Jesse Daconta
    Rental Property Investor · Newport News, VA · Member since 2018 · 264 posts · 130 votes
    5y

    @Wei Li

    Google search your [city, state REIA].

    Best,

    0Reply
  • Account Closed
    Rental Property Investor · Brooklyn NY · Member since 2018 · 263 posts · 469 votes
    5y

    Assuming you worked for this money, keep doing what you're doing except do it faster.  

    Rinse and repeat.  

    0Reply
  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    5y

    "Any ideas?"

    If you have $150K at 21, why not just do more of what you did and learn about options to place your money in the meantime?

    0Reply
  • Calvin OzanickBusiness Member
    Property Manager · Janesville, WI · Member since 2017 · 707 posts · 297 votes
    5y

    My first recommendation would to be to look out of state for deals. I live here in Rock County, Wisconsin. I primarily work the Janesville and Beloit markets. These areas are showing some of the best returns in the country. Large private businesses have invested major amounts of money into the market and have been driving major job growth. Amazon, ABC Supply Co., Dollar General, Shine Medical and Mercy Health have created a huge job surge in the market of late. I would love to sit down and talk to you over the phone and just see where your goals are at and how I can help. If you have any questions or interest, feel free to shoot me a PM and we can talk in the near future!

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  • Elijah Quinones
    Real Estate Agent · Aurora Colorado · Member since 2022 · 31 posts · 8 votes
    3y

    Hi, I just wanted to follow up and see how you are doing. Starting out young is inspiring to me and I would love any advice you might have. Although I am only 16 your advice will still be extremely helpful in starting something now or in the future. Have a great day!

    0Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    Come invest in Texas, can stretch that money a long way 

    0Reply
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