Will I be in a position to invest in Real Estate?
Member since 2022 · 34 posts · 5 votes
Will I be in a position to invest in Real Estate?
Most Popular Reply
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
3yBuy the book "Investing in Real Estate with Low (And No) Money Down" for ideas. Most of them are advanced and I wouldn't recommend unless you are experienced and have a good safefty net.
The DIY Landlord Book4.7247 Reviews
28 Replies
- Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes3y
Use DSCR lending, this qualifies the property not you.
- 3yRandall AlanPro MemberInvestor · Lakeland, FL · Member since 2017 · 1k+ posts · 1k+ votesLeverage your resources to be able to complete your first deal. Ask a family member that trusts / knows you to co-sign with you on the deal and cut them in or buy them out on terms that make sense for their level of participation.
Quote from @Evan Alexakos:
Hello everyone,
I've been delving into real estate research and plan to continue to do so going forward; however, I'm wondering if my current goals are illogical. I want to use real-estate as a secondary income source and I, following my plan, should have $20,000 to put towards a property next year.
The problem arises with financing, I'll still be in college with only a part-time job so banks would be unwilling to give me loans (under the assumption that banks want a full-time job). What can I do to reach my goal? Should I re-assess?
Thanks in advance!
Also, know that commercial lending departments (of local banks) use the revenue the property generates to evaluate the loan viability. Sure, they look at the person too… but they recognize an income property is going to generate income to offset the expense to pay the loan. So as long as you come to them with a winner it will be easier to get the deal done.
Randy $20,000 is a bit light. Even DSCR loans require 25% down.
$20,000 before closing costs & reserves isn't going to get you very much of a property anywhere. Your dreams aren't over though, this is just now. You keep putting money away like that you'll be in great shape. Having $20k saved up while in college already puts you so far ahead of the curve it's not even fair for the rest of the people in your age group. Your other option is using other people's money.
- Investor · Manhattan, NY · Member since 2018 · 103 posts · 70 votes3y
@Evan Alexakos, I am impressed that you have saved $20k while in college. I think I was $20k in student loan debt when I was your age. I agree with @V.G Jason. You are ahead of your peers, and the fact that you are here to ask questions, you still have a chance to be successful in real estate. I used to frustrate myself for slow progress at the beginning because I wanted to have the feeling of making progress. I didn't feel like saving $ was quick enough for me to feel the progress.
I want to know the goal of "buying a property next year." What are you hoping to achieve with real estate income? Maybe passive income with financial freedom. Are you perhaps building wealth and taking care of your family? Also, how soon are you hoping to achieve these goals? In 3 years or ten years? It will give you different paths and options depending on what you want and how soon you want.
You might not like this suggestion, but if I were you, I would recommend reading books. I think the perfect book that I can recommend for you to read is by Scott Trench. In the book, he talks about building a plan for your life, and the first step he recommends is to save money. How much money, did you say? $25,000. :) ($5000 more to save!) I think this book will guide you in real estate investing and help you explore different opportunities and options you may not have heard of.
Another suggestion is to search for a meetup in your area. Just meeting with other people with the same mindset will help you excel so much faster, and you might be able to build a stronger relationship in person. If you don't see any in your area, maybe consider creating one. I started my bi-weekly networking event this summer, and usually, no one shows up. But, occasionally, one or two people show up and are so grateful for setting up a meeting. You will have instant credibility for setting up a meetup because others out there are in the same situation as you. They don't see a meetup in their area and get discouraged. I was afraid of setting up a meetup, but it was just all in my head doing negative self-talk, and I am happy that the people who showed up are supportive!
Good luck, and let me know what you think about the book or a meetup idea. I'd be happy to help you in any way I can! :)
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes3y
Buy the book "Investing in Real Estate with Low (And No) Money Down" for ideas. Most of them are advanced and I wouldn't recommend unless you are experienced and have a good safefty net.
The DIY Landlord Book4.7247 Reviews - Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes3y
@Evan Alexakos this is where you may be able to have a parent cosign to help you get rolling. A lot of families will do this for a child's first home, and maybe your family would be willing if you purchased a duplex or triplex? If you can figure out where you want to invest, have an honest conversation with them about how you want to get started.
If you can't get your families backing, it may make sense to keep saving your cash. You are doing an awesome job! Like others have said, in college I had about $20... not $20,000!
- 3yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Keep saving and more importantly, keep learning. Learn everything you can about Construction and the Real Estate business. It will do you little good to get a few nice properties and mismanage them, screw them up and lose them....
- Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes3y
Quote from @Evan Alexakos:
Hello everyone,
I've been delving into real estate research and plan to continue to do so going forward; however, I'm wondering if my current goals are illogical. I want to use real-estate as a secondary income source and I, following my plan, should have $20,000 to put towards a property next year.
The problem arises with financing, I'll still be in college with only a part-time job so banks would be unwilling to give me loans (under the assumption that banks want a full-time job). What can I do to reach my goal? Should I re-assess?
Thanks in advance!
Here's my recommendations
1. Continue to save
2. While saving network with some like-minded people, searching for someone else who may also have $20K or more saved.
3. Build a list of family, friends that you may approach for a loan. Don't approach them yet but have your list and a package ready for an approach. The key thing about your approach is showing them that you will have some skin in the game- your $20K
4. Continue to learn and research strategies for raising $ to supplement what you're saving on your own.
You'll note that most of my recommendations are about leveraging Other People's Money (OPM) while saving up yourself. Even when you go to a bank you're leveraging OPM. If I were you I'd treat learning about Real Estate just the way you are treating whatever you're studying in college. - Member since 2022 · 34 posts · 5 votes3y
Quote from @Eliott Elias:
Use DSCR lending, this qualifies the property not you.
Thanks, Eliott! A quick google search tells me that DSCR lending will focus on the income that a property could generate and not myself, so I'll need to self-edify further. But in theory, DSCR sounds great!
- Member since 2022 · 34 posts · 5 votes3y
Quote from @Randall Alan:
Leverage your resources to be able to complete your first deal. Ask a family member that trusts / knows you to co-sign with you on the deal and cut them in or buy them out on terms that make sense for their level of participation.Quote from @Evan Alexakos:
Hello everyone,
I've been delving into real estate research and plan to continue to do so going forward; however, I'm wondering if my current goals are illogical. I want to use real-estate as a secondary income source and I, following my plan, should have $20,000 to put towards a property next year.
The problem arises with financing, I'll still be in college with only a part-time job so banks would be unwilling to give me loans (under the assumption that banks want a full-time job). What can I do to reach my goal? Should I re-assess?
Thanks in advance!
Also, know that commercial lending departments (of local banks) use the revenue the property generates to evaluate the loan viability. Sure, they look at the person too… but they recognize an income property is going to generate income to offset the expense to pay the loan. So as long as you come to them with a winner it will be easier to get the deal done.
RandyGreat insight Randy,
I'll talk some more to family members about chipping in on the down payment but not many are interested in co-signing; that said, knowing that banks will also consider the income that property will generate gives hope to continue the journey at this stage in life!
- Member since 2022 · 34 posts · 5 votes3y
Quote from @V.G Jason:
$20,000 is a bit light. Even DSCR loans require 25% down.
$20,000 before closing costs & reserves isn't going to get you very much of a property anywhere. Your dreams aren't over though, this is just now. You keep putting money away like that you'll be in great shape. Having $20k saved up while in college already puts you so far ahead of the curve it's not even fair for the rest of the people in your age group. Your other option is using other people's money.
Grateful for the honesty Jason,
In the initial plans, I forgot to consider the closing costs and reserves for property. There's a significant chance at getting the 25% if I network but revising plans requires an accurate prediction of the amount needed. How much does extra expenses (not including the purchase or renovation of property) add up to on average?
- Member since 2022 · 34 posts · 5 votes3y
Quote from @Masashi Borges-Silva:
@Evan Alexakos, I am impressed that you have saved $20k while in college. I think I was $20k in student loan debt when I was your age. I agree with @V.G Jason. You are ahead of your peers, and the fact that you are here to ask questions, you still have a chance to be successful in real estate. I used to frustrate myself for slow progress at the beginning because I wanted to have the feeling of making progress. I didn't feel like saving $ was quick enough for me to feel the progress.
I want to know the goal of "buying a property next year." What are you hoping to achieve with real estate income? Maybe passive income with financial freedom. Are you perhaps building wealth and taking care of your family? Also, how soon are you hoping to achieve these goals? In 3 years or ten years? It will give you different paths and options depending on what you want and how soon you want.
You might not like this suggestion, but if I were you, I would recommend reading books. I think the perfect book that I can recommend for you to read is by Scott Trench. In the book, he talks about building a plan for your life, and the first step he recommends is to save money. How much money, did you say? $25,000. :) ($5000 more to save!) I think this book will guide you in real estate investing and help you explore different opportunities and options you may not have heard of.
Another suggestion is to search for a meetup in your area. Just meeting with other people with the same mindset will help you excel so much faster, and you might be able to build a stronger relationship in person. If you don't see any in your area, maybe consider creating one. I started my bi-weekly networking event this summer, and usually, no one shows up. But, occasionally, one or two people show up and are so grateful for setting up a meeting. You will have instant credibility for setting up a meetup because others out there are in the same situation as you. They don't see a meetup in their area and get discouraged. I was afraid of setting up a meetup, but it was just all in my head doing negative self-talk, and I am happy that the people who showed up are supportive!
Good luck, and let me know what you think about the book or a meetup idea. I'd be happy to help you in any way I can! :)
Masashi, I've very happy that you shared your initial experiences of real-estate with me. It helps a lot to know what other people have felt (and learned) along the way so thank you for sharing that information. :)
My goal is to create a secondary source of income that could (if the case every arrived) replace a job; that said, this is less out of necessity and more for financial peace of mind. The objectives are to: 1. create a secondary source of income in a year, 2. expand the secondary source of income to match a yearly salary at minimum wage within 2 years, and 3. create a livable wage through real-estate within 4-5 years!
Truthfully, I don't feel confident in setting up a meet-up around real-estate due to how little I truly know but I would welcome any advice on doing so! In the meantime, I'll add Set for Life by Scott Trench to the reading list. :)
- Member since 2022 · 34 posts · 5 votes3y
Quote from @Nathan Gesner:
Buy the book "Investing in Real Estate with Low (And No) Money Down" for ideas. Most of them are advanced and I wouldn't recommend unless you are experienced and have a good safefty net.
Thanks Nathan, I'll add that to my reading list though I am a bit concerned about the practicality of knowing advanced strategies at this stage (at the least, it will grow my knowledge).
- Member since 2022 · 34 posts · 5 votes3y
Quote from @John Warren:
@Evan Alexakos this is where you may be able to have a parent cosign to help you get rolling. A lot of families will do this for a child's first home, and maybe your family would be willing if you purchased a duplex or triplex? If you can figure out where you want to invest, have an honest conversation with them about how you want to get started.
If you can't get your families backing, it may make sense to keep saving your cash. You are doing an awesome job! Like others have said, in college I had about $20... not $20,000!
Appreciative of the honesty and support John!
I know that family members are willing to help with the costs of purchasing real-estate, but cosigning is a different ballpark; if the property makes money than it will actually be a negative to my parents (assuming they cosigned) because of our situation. That said, your positivity helps my spirits stay high. :)
- Member since 2022 · 34 posts · 5 votes3y
Quote from @Bruce Woodruff:
Keep saving and more importantly, keep learning. Learn everything you can about Construction and the Real Estate business. It will do you little good to get a few nice properties and mismanage them, screw them up and lose them....
Honesty is the best policy Bruce, always thankful of somebody telling the blunt-faced truth. As a bonus, you gave me the insight to research construction! I'll be sure to do my due diligence so that I can avoid the pitfalls in which other investors have failed.
Would you have any advice on resources about construction?
- Member since 2022 · 34 posts · 5 votes3y
Quote from @Crystal Smith:
Quote from @Evan Alexakos:
Hello everyone,
I've been delving into real estate research and plan to continue to do so going forward; however, I'm wondering if my current goals are illogical. I want to use real-estate as a secondary income source and I, following my plan, should have $20,000 to put towards a property next year.
The problem arises with financing, I'll still be in college with only a part-time job so banks would be unwilling to give me loans (under the assumption that banks want a full-time job). What can I do to reach my goal? Should I re-assess?
Thanks in advance!
Here's my recommendations
1. Continue to save
2. While saving network with some like-minded people, searching for someone else who may also have $20K or more saved.
3. Build a list of family, friends that you may approach for a loan. Don't approach them yet but have your list and a package ready for an approach. The key thing about your approach is showing them that you will have some skin in the game- your $20K
4. Continue to learn and research strategies for raising $ to supplement what you're saving on your own.
You'll note that most of my recommendations are about leveraging Other People's Money (OPM) while saving up yourself. Even when you go to a bank you're leveraging OPM. If I were you I'd treat learning about Real Estate just the way you are treating whatever you're studying in college.Crystal, I'll follow these steps religiously on my journey to the first property. The insight into networking and marketing myself to others is beneficial to any future success in real-estate (as well as life); I'll add networking to my research agenda and thank you for educating me!
- Real Estate Agent · Kansas City, MO · Member since 2020 · 95 posts · 119 votes3y
Quote from @Evan Alexakos:
Hello everyone,
I've been delving into real estate research and plan to continue to do so going forward; however, I'm wondering if my current goals are illogical. I want to use real-estate as a secondary income source and I, following my plan, should have $20,000 to put towards a property next year.
The problem arises with financing, I'll still be in college with only a part-time job so banks would be unwilling to give me loans (under the assumption that banks want a full-time job). What can I do to reach my goal? Should I re-assess?
Thanks in advance!
Hi @Evan Alexakos,
Now would be a great time to learn everything you can about creative financing. This video is a great place to start. SubTo / Seller Financing will get you past the roadblock of having to qualify with a lender, and can also lead to a lower interest rate.
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes3y
Quote from @Evan Alexakos:
Some of them can/should be used right away. Check out this podcast where a young guy got to 81 units by the age of 21. He found sellers willing to sell properties with no money down.
I've not been that successful in my small town, but I did buy properties with only 10% down and the sellers gave me better interest rates than the bank.The DIY Landlord Book4.7247 Reviews - 3yRandall AlanPro MemberInvestor · Lakeland, FL · Member since 2017 · 1k+ posts · 1k+ votes
So I think you might miss part of the point on co-signing / cutting a family member in on the deal. At least to why they would be motivated to do so. The property is also (potentially) an income property for THEM depending on how you frame your deal. There could be several ways to do it - one might be along the line of it being a loan from them… like, “if you loan me the extra $15,000 I need to make this deal go, I’ll pay you X% interest on your money until I repay the $15,000, and you being 50% owner on the property is my collateral that I will make that happen. When I pay you back, you deed the property back to me.” That’s sort of a lopsided “parent friendly” version where they see you as the ultimate owner, but get a return on their investment, and they still have security on their money. But it could still come with some risk to them. Risk could look like: tenant quits paying their rent and you need to evict them, but they are still in the unit and the mortgage needs to be paid… what do you do?) This is where a duplex is nicer getting started. Usually one side of the duplex covers the mortgage. If the other side is empty / not producing, you are at least able to service your debt obligation.
A descent duplex deal should net $500-600 a month in income (at least ours do) after principle, interest, taxes , insurance, and a maintenance reserve. A less “parent friendly” deal would be more like “co-owners” where you split the profits each month and you still have to buy them out. Another version could be where you actually just partner on the property and continue to share the deal all the way through (if your parents wanted to get involved in real estate themselves). Sure, you make only 1/2 the money, but you get started and maybe have a longer term financial partner to help deal 2,3,4 get done. So there are a lot of paths there, depending on how you want / need to frame it. The secret is not to get stuck at step one - which is “I would like to invest in real estate”. Getting that first deal done is the key to your future in the business.
all the best!
Randy - 3yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Quote from @Evan Alexakos:
Quote from @Bruce Woodruff:
Keep saving and more importantly, keep learning. Learn everything you can about Construction and the Real Estate business. It will do you little good to get a few nice properties and mismanage them, screw them up and lose them....
Honesty is the best policy Bruce, always thankful of somebody telling the blunt-faced truth. As a bonus, you gave me the insight to research construction! I'll be sure to do my due diligence so that I can avoid the pitfalls in which other investors have failed.
Would you have any advice on resources about construction?
Hey Evan - Anything is good. Silly as it sounds, going to those Home Depot weekend seminars where they show you how to do tile and lite wiring and plumbing etc, is great way to start! YT videos are ok, but you need to put your hands on to really get it. Ask friends if you can help for free on their little remodels. Volunteer for Habitat For Humanity. Volunteer to do cleanup at a real construction jobsite...
Keep track of everything you do, it may help you qualify for a GC license one day down the road.
- Investor · Chicago, IL · Member since 2019 · 62 posts · 27 votes3y
@Evan Alexakos If you have an offer letter for full-time employment that aligns with your major, you can use that to get a pre-approval letter while still in college and start your search. I was able to get pre-approved 2-3 months before I graduated by doing this. Not sure what stage of college you're at, but that may help a little bit
- Lender · Charlotte, NC · Member since 2015 · 124 posts · 22 votes3y
@Evan Alexakos
I can help, feel free to reach out.
- Member since 2022 · 26 posts · 4 votes3y
Hard to save a 20% for a down payment but still looking for alternatives like Credit cards, personal loans, hard money lender and even my car, after i finish my degree.
- Member since 2022 · 34 posts · 5 votes3yHey Alex,
Quote from @Alex Gunnerson:
Quote from @Evan Alexakos:
Hello everyone,
I've been delving into real estate research and plan to continue to do so going forward; however, I'm wondering if my current goals are illogical. I want to use real-estate as a secondary income source and I, following my plan, should have $20,000 to put towards a property next year.
The problem arises with financing, I'll still be in college with only a part-time job so banks would be unwilling to give me loans (under the assumption that banks want a full-time job). What can I do to reach my goal? Should I re-assess?
Thanks in advance!
Hi @Evan Alexakos,
Now would be a great time to learn everything you can about creative financing. This video is a great place to start. SubTo / Seller Financing will get you past the roadblock of having to qualify with a lender, and can also lead to a lower interest rate.
I've added the video to my watchlist for YouTube and will look further into creative financing; specifically sub to seller financing (which I like the idea of). Thanks for the tips!
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