How to start in real estate with very little money

Question

Hi guys I'm 21 years old don't have any college debt but don't have too much money either. How can i get started in something profitable with 10k? (btw I'm in Florida)

Nathan Gesner · Answer

House hacking is a great way to start because it gives you an investment and a place to live with little money down. Here's my generic beginner advice:

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.

Nathan Grabau · Answer

House hack. You might be able to find a low down payment product, maybe even 0% down with a new build, live in it, then rent out the rooms.

When I was 21, I bought my first house for 370k with 18k down, and now it is worth over 600k(5 years later). I have been able to now take money out of my house through cash out refi's and heloc's and now have a duplex, triplex, and six-plex. Feel free to reach out to me directly and I can help you find a great realtor in your area to help you!

Ty Ash · Answer

Hi @Schneur Sanowicz!

Already some great advice here but I'll add some more! First, I recommend that you keep/start learning! Podcasts, Books, and Mentors you find by networking.

Next, 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 newer 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. After reading this, you'll find that you might want to build a little more capital before house hacking to make sure you're operating from a strong financial situation.

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!

Nathan Gesner · Answer

Buy a house with 3-4 bedrooms, rent out the other bedrooms.

Instead of saying, "I can't" you need to ask, "How can I?"

Eliott Elias · Answer

Seller financing or wholesaling

Ty Ash · Answer

A key part of @Drew Sygit's question is, do you have the knowledge? If not, keep on learning! Part two, do you have the confidence? Confidence comes from being knowledgable and taking action.

You said it yourself, "why would the experience investor want to talk to me if I don't know anything?". There's a good chance that the majority of people are thinking the same thing so they never try because of the fear of the word NO and rejection.

It sounds like your next most important step is learning so keep with it!

Jason Maguire · Answer

FHA 3.5% down & house hack. Or seller financing of some sort.

Drew Sygit · Answer

@Schneur Sanowicz again, do you have the courage to approach them and the knowledge to convince them?

Read it slowly, as many times necessary, until you understand what it implies!

NO ONE is going to just give you what you want.

Zambricki Li · Answer

10k you could do Airbnb rental arbitrage. Save 50k then level up.

Schneur Sanowicz · Answer

@Drew Sygit there are actually two people in my neighborhood that have 250M dollars. I don't know where to start though, what do I pitch them? They invest themselves and make so much money why would they listen to a 21 year with little to none experience.

How to start in real estate with very little money

Most Popular Reply