23 Yr Old Looking For Advise From All Who Will Give It!!

[Tristan Block]

Hello all,

First Ill give you a short background of my situation.  I just graduated summer of 21' with a BS in Finance.  I have obtained my first full time job here in Bloomington working at the local IU Credit Union where I'm currently making about 40k a year as a Mortgage Loan Processor.  I am also currently half way through my online Masters program where I am expected to graduate at the end of next year.  Over the past year, I have been trying to drown myself in as much information surrounding real estate investing as it is something I believe will enable me to become financially free quicker than any other route.  I have 2 hurdles that I am trying to figure out how to get over in the process of obtaining my first property.  The first unfortunately being my credit score. It is currently pretty low at around 645 (not for any derogatory reason just due to me only having a debit card and 2 bank accounts all the way up until I graduated, so I just haven't built any credit from CC or having any bills in my name throughout college) so the financing I would qualify for would be the highest rate unfortunately.  While my credit is low, i have 0 debt other than about 10k in student loans that i wont have to begin paying until after i graduate.  The other issue is gathering the DP & closing funds.  Fortunately, up until I graduate from my masters program, my parents are covering my rent and then all other expenses are covered by me (utilities, gas, food, my dog, etc.).  I am currently saving around 500 - 800 a month to try and save as much as I can as quickly as I can before I have to add all these other expenses to my bills like various insurances and things (I can stay on my parents insurance until 24 or 25 I believe).  I would really like to be able to try and acquire my first property here in the next 12 - 18 months if at all possible and get out of renting ASAP.  I am open to all different forms of real estate investing whether it be multi family, single family, or even just getting a place to flip to work on over the next year or 2 while me and my girlfriend live in it.  Both our parents have remodeled their homes so we would be able to save a lot of money borrowing their tools and experience.  Once my girlfriend is done with school here in the next 2 - 3 years we do plan on leaving Indiana for sure but have not decided where yet.  Bloomington, IN is around 65% renter occupied so I have no doubt that we would be able to rent out practically any place that we can get our hands on here.  It is also a big college town having Indiana University located here.  I have even seen people going on reddit talking about how they can barely find anywhere affordable to rent and there are several apartment complexes here that even have a waitlist to move into them.  I know this is probably a lot of info to take in, but essentially my question is should I try to look for some kind of other private financing in order to afford a DP & closing costs earlier so i can get started sooner?  Should I just wait until I can build my credit a bit more and save enough of my own money for the next year or 2? Should I wait to get out of Indiana altogether and acquire my first property in the area I relocate to where I'll have a much higher paying job from obtaining my masters?  Any advise is welcome and i am excited to see what kind of knowledge i can dig up from this forum!!  

[Alex Breshears]

Hi Tristan!

I'm glad you are reaching out and so ambitious! That's wonderful!

Where to start is a very popular, yet personal questions, so I'm glad you are looking for advice about this.

I'm going to take a different approach than most and say you actually need to stop and do some work before you even start the real estate journey. Here are a few considerations you should be looking at even before you start. I know you mentioned you are open to all investing options, but in reality all those options are VERY different, and have some pros and cons associated with each. While you are working full time as a loan processor, there may be some that add more burden to your life than actually help, or even worse end up working you into another 40 hour a week job!

1. What are your personal goals? (don't just answer financial freedom, everyone wants that. In reality they generally want something else that financial freedom allows them to do). I suggest asking yourself "why" 5 times to get to the root of the desire to invest. For example: I want to invest in real estate. Why? I want monthly cash flow so I can leave my job. Why? Because I want to spend more time with family? Why? My parents were always home and available to me as a kid, so I want my children to have that same experience. etc etc etc. When you can see a picture of your why, write that down!

2. Think about that real root goal. What does it look like? How much time will you have to spend on other endeavors if you hit that goal. Buying 20 single family homes to be rentals sounds amazing, but only if that is your goal. Personally I'll never own long term rentals, but that's just me. Tried it, hated it, got the tshirt, not going back. In this section you are really trying to think about WHAT you enjoy doing, WHEN do you enjoy doing it, what is your lifestyle going to be when you hit that goal. There is no point in trying to invest as a GP multifamily syndicator if you really don't like the multifamily space, and don't want to sit in on weekly GP calls for asset management updates.

3. Once you have the goal, your time commitments, think about what else you bring to the table rather than money. Believe it or not, money is the easy part. Commitment, consistency and follow through is the hard part. What do you bring to real estate investing? Do you have a construction background? Have you done project management? Are you a structural engineer? Are you good with people? Do you have a brokers license? Do you love working with Excel analyzing data and making graphs? There are a lot of things you COULD bring to the table, but also realize do you enjoy those things and how much time will those things take up in your life.

4. NOW you are ready to explore the options in real estate investing. You can narrow down the buffet of choices pretty easily by eliminating options that purely just don't fit your strengths, goals or time commitment. Don't focus on your limitations and what you can't do right now. Ask your brain how can I do this, instead of shutting down your thought process with a declarative statement of " I can't do this" and then you fill in all the reasons why. Come with an inquisitive open mind, and you will find a way. You will also attract other people that exhibit those qualities, and building that team of people that all have the same goals is amazing! You don't have to go it alone!