First Year College Student Here - How do I start?

Question

I am about to go into my first year of college and I want to ensure my financial freedom in my future. What things should I do while I'm still young and have time to get started early on? Is there anything I can do in order to get a head start? Advice would be greatly appreciated.

Nathan Gesner · Answer

Here's some generic "beginner" advice. Don't wait until you get out of college! Partner with your parents, or someone with some money, and buy a fourplex or large house to live in and rent out to other students. You'll have 3+ years of experience before you even graduate.

I recommend you build a strong foundational understanding of real estate investing.

1. Start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by Brandon Turneror The Unofficial Guide to Real Estate Investing by Spencer Strauss.

2. Get your finances in order. Get rid of debt, build a budget, and save. The idea that you can build wealth without putting any money into it is a recipe for disaster and the sales pitch of gurus trying to steal your money. A wise investor will not try to get rich quick with shortcuts. If you can't keep control of your personal finances, you are highly unlikely to succeed in real estate investing. Check out my personal favorite, Set For Life by Scott Trench , or The Total Money Makeover by Dave Ramsey.

3. As you read these books, watch the biggerpockets podcasts. This will help clarify and reinforce what you are reading. You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes.

4. Now you need to figure out how to find deals and pay for them. Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum. There is a handy search bar in the upper right that makes it easy to find previous discussions, blogs, podcasts, and other resources. Biggerpockets also has a calculator you can use to analyze deals and I highly recommend you start this as soon as possible, even if you are not ready to buy. If you consistently analyze properties, it will be much easier to recognize a good deal when it shows up. Find Brandon's videos on YouTube for the "four square" method of analyzing homes and practice. It doesn't take long to learn how to spot a good deal.5. Study the market. You can learn to do this on your own or get a rockstar REALTOR to lead the way. I highly recommend a well-qualified REALTOR that works with investors and knows how to best help you.

6. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. The truth is, you could read 100 books and still not know enough because certain things need to be learned through trial-and-error. You don't need to know everything to get started; you just need a foundation to build on and the rest will come through experience and then refining your education.

You can build a basic understanding of investing in 3-6 months. How long it takes to be financially ready is different for everyone. Once you're ready, create a goal (e.g. "I will buy at least one single-family home, duplex, triplex, or fourplex before the end of 2019") and then do it. Real estate investing is a pretty forgiving world and the average person can still make money even with some pretty big mistakes.

Randall Alan · Answer

It’s easiest to start by getting a property for you to live in… mainly because it only takes 3-5% down, and your interest rate will be lower. This takes proof of income though… so it might take until you are out of college to achieve, depending on your resources. Some alternatives might be to enlist a parent to co-sign with you on your first house.
After that, you could move out if that house, turn it into a rental, and you are more on your way… you can buy your next house to live in with 3-5% down again.
You could also start out buying a multi-unit property you will live in… then you have e rental income right off the bat.

Otherwise, to buy a rental up front you will need 20-25% down payment.

Hope it helps!  Randy

Drew Sygit · Answer

@Rishab S. Find a 2-unit property with as many bedrooms as possible near your university.

Talk your parents/relative/friend into cosigning for you on an FHA loan, which will only require 3% down.

Negotiate for seller to pay 6% of closing costs and escrows for you (basically, you finance into the loan amount).

Rent out every room to fellow students to pay the mortgage and then some.

Ty Ash · Answer

Hi @Rishab S.!

I'd recommend that you keep/start learning! Podcasts, Books, and Mentors you find by networking. You're at a good age to work for someone else and start earning an income while learning from their business and experience in a field of your choice.I'd pick up a copy of Set for Life by Scott Trench as it has a good framework for financial independence, especially for a younger investor. Real Estate is just a part of your total financial picture so don't become too focused on just real estate. You'll want to learn more ways to increase your income now and in the future, keep your expenses low, and take the difference to invest into assets, real estate/business.As already mentioned above, a house hack will probably be one of the best strategies for you to get started and take action while giving you a great return because of the low % down needed to get started. Once you get to this point make sure to run your numbers for both while living in the house hack (lowering your living expense to less than what it would be to rent in your area) and post move out where you need to be at least break even after accounting for your monthly payment + maintenance, capex, vacancy, property management.Best of luck getting started! Here for you with any questions you have along the way!

Dan Sheeks · Answer

Hey @Rishab S.

Congrats on your ambition!

Bigger Pockets recently published a book that's perfect for you! It's called First to a Million. You should check it out! If you have questions about the book, let me know. I am the author. :-)

In addition, DM me if you are interested in an online community of young, like-minded individuals.

Best of luck to you!

Dan

Jaron Walling · Answer

@Rishab Shekhar Find someone responsible enough to co-sign on a loan. Buy a 3-4 bedroom property you can house-hack during college. Live there until you graduate.

Make some sacrifices. Screening and managing roommates/friends/tenants (what ever you want to call it), keeping the lights on, fixing damage, and collecting rent every month won't be easy, but imagine how much knowledge you'll gain and money you could save. College students need housing and investors provide it. You either pay someone for housing or other people pay for you. I believe most people can find something when they try hard enough.

First Year College Student Here - How do I start?

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