Side Hustle or Jump to Real Estate?

Question

Hello everyone, I'm James Demaniow. I'm 20 years old and I am embarking on my journey to financial freedom this year.

I'm going to start with house hacking. I have about 18k saved up and was wondering if I should start a side hustle to really push to a 25 - 30k range before I house hack. Or should I just begin looking for my first property now with the money that I have saved up?

Any advice, suggestions, or opportunities is greatly appreciated.

Lawrence Briggs · Answer

@Bud Gaffney I agree! I have a standard 9-5 and my side hustle is food delivering. Doing both is allowing me to close on my first SF rental this week!

Chace Fraser · Answer

@James L. Demaniow welcome to the BP community. Just by joining you are taking the first step to financial freedom.

House hacking is an incredible way to get into buy and hold real estate investing with a relatively low financial barrier to entry… plus the added benefit of reducing housing costs!

Getting your mindset right, setting goals, and creating a strategy are essential first steps to investing in real estate. It's also crucial to surround yourself with the right people.

Your budget should be enough for the down payment, inspections, closing costs, reserves, rehab (even if it’s going to be years in the future), enough to cover costs when you don't have a tenant (potentially for MONTHS), etc. If you’re looking for an easy answer it’s difficult to give an exact one. He are some ideas for how much you’ll need (but you’ll need to do more research because it’s different in all areas):

Downpayment: 3.5 percent of purchase price (if you’re using an FHA Loan)

Inspections: $1,000

Closing Costs: In my market they typically come out to 1.5 to 2 percent of the purchase price

Reserves: 3-6 months or more of mortgage payments (remember when COVID hit and people didn't have to pay rent? Yeah, the more the merrier… we did 8 months and we were happy we did).

Rehab/CapEx: This was calculated into the reserves for us. We also knew the roof needed to be replaced within 5 years of purchasing

Best of luck and I look forward to hearing how it goes!

Joshua Janus · Answer

I would utilize the house hack with an FHA loan as as possible. Make sure the property cash flows well with long term renters already in place if possible. Combine this with continuing to save and you will be ready to go! I set aside 20k for my house hack.

Elizabeth Richter · Answer

@James L. Demaniow I vote to jump in! You won’t regret it. But if you don’t jump in now and choose to wait you might continue to find excuses not to.

Jaron Walling · Answer

Depends on your personal risk, financial situation, and investment strategy. House hacking is a great option but if you have any debt (consumer, student, auto, personal) weighing you down it's not wise to buy real estate. Nobody continuously leveraged there way to financial freedom. They take calculated risk with loans and factor in cash reserves for the rainy days. You need enough for reserves and emergencies on day 1.

If you're debt free with a stable job and did a lot of market research then I say go for it! Talk to local investors and agents and find problems to solve. Walk a bunch of properties, stick to your numbers, and embrace the struggle because it's going to be real.

Cody Lewis · Answer

If the cashflow works on a property you can buy with the money saved, why not jump in now? You'll have your rent from the house hack and (likely) your 9-5 income as well. You'll probably be able to save your capital back up to invest in other real estate as well.

Bud Gaffney · Answer

or do both :)

Gian Cuffaro · Answer

@James L. Demaniow if the side hustle makes more tha. 2-3k a month allowing you to recoop the mo ey then do that along with working your daily job. After that jump in! Good luck

Theresa Harris · Answer

Can you find a place that works with $18K down payment?  It really depends on how much you can borrow, prices in your area and what the numbers look like.  Don't buy something just to buy it. Make sure you are in a good area.

Bud Gaffney · Answer

Jump to Real Estate !

Side Hustle or Jump to Real Estate?

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