20 Years Old With £20,000 ($30,000)

[Jack Wiggins]

Hi Everyone,

After many months of watching, listening and taking advice to form a strategy for my property investment plan, I have finally decided to post!! I just wanted to see what experienced property investors think about my current situation and what would be the best way to start.

Just a bit of background....

I'm 20 years old, based in England (so processes may be slightly different), went to University and dropped out after 1 year because I wanted to start a business. After I dropped out, I soon established a small web design company generating around £20,000 ($30,000) a year after only 9 months. However, I quickly realised after 9 months that I haven't created a business, I have created a job and thus, looking to start a new venture into the world of property investment (or as you guys say, Real Estate).

This leads onto my question of where do you guys think I should start with only £20,000 ($30,000) sitting in the bank?

This is the strategy I have in mind (please advise):

- Buy unloved or rundown large houses below market value (sell in my new area at auction anywhere between £130,000 upwards) in great rental areas (high population of young professionals, students, etc);

- ADD VALUE!! Convert into either HMO's (house of multiple occupants) OR self contained 1-2 bedroom, 1 bathroom apartments depending on location and building structure / floor plans.

- Through the added value, cash out through remortgaging the property and using this money to then invest in the next one.

- Hold all of these properties in my portfolio for the rental income generated.

PS: I'm moving across country to a city called Manchester in September 2016, so it will be a completely new area / market. I was thinking of becoming an real estate agent for 1-2 years to learn the property market in this new area, make contacts through networking, learn how to source great deals, etc, etc. Any thoughts on this too?

[Josh Calcanis]

Welcome to the forums! Amazing job on starting your own business and (most importantly) making it profitable. We can relate because I'm 26 and got into REI a year ago. I only have 4 units as of now (SFH and Triplex). First off before anything else (just like with your business) you need to really think about what you want to do with REI and what your end game is. If you dive in expecting to do everything you might end up getting that 'job' feeling again. Also if you know what you want at the end of the road it's going to be a lot easier to work backwards and create a game plan. I wish I would have started at your age!

If I would have started at your age with 30k I would have done a live and flip (or buy hold). The reasoning is someone else is paying your mortgage and you're living in a home free of charge. The really important thing there is to run the numbers! Are you going to have a positive cash flow (or breakeven when your living there) while living there and are you going to have a positive cash flow when you leave? By living in it you can also put much less down and use the rest for a flip to see if that's something you're a fan of.

Everyone has a different opinion on the real estate license. The podcast from two weeks ago, had a guest that was all about it. IMHO it allows you access to MLS on your own time and gives you the ability to wholesale, which can be really tricky if you don't put some effort in (but what doesn't demand some extra effort). Met a man last month at one of our local REIA meetings in Seattle, Anthony Chara, that has never got his real estate liscense and hasn't managed properties (uses a PM) and is sitting at 200 units over 10 years. It really depends on whether or not YOU think it's worth it for what YOU want to do.

Good luck with everything.