20 Years Old, Soon Moving into My First Place. Advice?

Question

Background: I'm 20 years old, active duty Navy stationed in San Diego for the next 5 years.

So, my wife is going to be moving out here from New York where we are from in June. Right now she is living with her parents while I have been going through training for the past year and a half. Our plan all along has been to move into a military housing 2 bed 1 bath home for 1600 per month. I have recently become extremely interested in real estate investing and have been reading books, listening to pod casts, and studying these forums religiously. So I'm coming to realize that renting might not be our best option and that buying a house to eventually flip or possibly rent when we move on might be much smarter. My question to you more experienced investors, what would you do in my situation? Would you buy now rather than rent or maybe rent for one lease agreement to give ourselves more time to search the market for a home? I appreciate any help i can get! Thanks.

Matthew Paul · Answer

I went camping at a naval base in southern Maryland near pax river. What I found interesting  was the number of military that lived in their RV . I talked to one guy and he gave me the story , it was $ 200 a month to keep the camper there , he was getting $ 1500 housing allowance . The RV cost him 2 grand . He worked his navy job , had a part time job , and he was bird dogging real estate . I real hustler , I was impressed . He was putting the extra money into the bank to buy a house and flip for himself .    Something to think about

Michael B. · Answer

My advice -- base housing is your friend.

Buying your own house doesn't usually work out well unless you're going to be there at least 5 years. There's just too much in selling costs and fixing up costs to make it worthwhile. There's a decent likelihood that you can't sell it when you're ready to move elsewhere. And as you've probably found out by now a 20 year old's salary just doesn't buy a lot in San Diego.

Another point -- if you end up spending long periods of time cruising the Pacific for Uncle Sam then base housing is really nice. Your wife will have folks around that have 'been there, done that' to help out. And that support system is really nice if you're gone for a long time.

Your time to buy a house will come, but it's not now. Wait until you leave the Navy or get stationed at a base where the prices aren't as high an volatile as California. Your time to buy a house will come, but it's not now.

BTW, my son is a 21 year old Army E-5 that's headed for Pearl Harbor soon to live the next few years with his wife (and soon with a son also). I gave him this same advice -- wait.

Paul Timmins · Answer

@Peter Whitaker

Welcome. Thanks for your service.

Check out the Start Here page http://www.biggerpockets.com/starthere

Check out BiggerPockets Ultimate Beginner's Guide - A fantastic free book that walks through many of the key topics of real estate investing.

Check out the free BiggerPockets Podcast - A weekly podcast with interviews and a ton of great advice. And you get the benefit of having 50 past ones to catch up on.

Two Great reads, I bought both J. Scott The Book on Flipping Houses,The Book on Estimating ReHab Costshttp://www.biggerpockets.com/flippingbook

Locate and attend 3 different local REIA club meetings great place to meet people gather resources and info.

Consider checking out HUD homes for small multi's owner occupied gets first crack.

You might consider Niche or Specialized Housing like student housing. Rents can be 2-4 times more. Remember you don't have to own a property to control it.

Good luck

Paul

Daren H. · Answer

To piggyback on what Elizabeth  Colegrove said, if you do decide to buy as a personal residence with the idea of renting later (which I think is a good idea), you need to buy the house initially as a rental otherwise it may not be a good rental later. You will get all of the favorable financing terms available for primary residence purchases.

You could do this at every stop. Just keep in mind there are different challenges with owning and managing properties in different states.

Elizabeth Colegrove · Answer

@Peter Whitaker

My husband is active duty. We have bought at every duty station that has made sense. That being said, we don't buy "personal" properties. We buy houses that make sense as rentals and buy them as personal residences (so lower interest rates/down payments) and than rent them out when we are relocated or we decide to move again.

We tend to buy in A areas. We have houses with clientel that we can self manage long distances. The rent is at least $200-$300 more than the mortgage. More if we are going to have major expense (older home needs more of a buffer because roofs, siding, windows and other larger expenses are sooner than newer houses)

Peter Whitaker · Answer

@Paul Timmins Thanks Paul. I have been listening to the podcasts, and i just read Millionaire Real Estate Investor which was very good with a few more books on order also. I'm going to look for a local REIA meeting very soon.

Peter Whitaker · Answer

@Forrest B. I will be able to get into base housing since we have already been on the waiting list for awhile now and are almost at the top. I think waiting is the best choice and just save as much as possible while I'm in. Thanks for the advice.

@Michael B. Valid point for sure. I think i need to just slow down for now and learn as much as i possible can.

Forrest B. · Answer

Peter,

I'm in the Navy as well, though I've been stationed on the East Coast most of my career.  I've heard and known a lot of people go underwater on their houses in San Diego.  I don't know the current market, but unless it's profitable on a cash flow basis, you probably don't want it.

Even if you can't get into base housing, it might be better to just rent and save your money, then focus on buying into your local New York market.  You can go a lot further in Central New York with your resources than in San Diego.

Forrest

Peter Whitaker · Answer

@Richard Montoya Thanks for taking the time out of your day to give me a lengthy response, i appreciate it. My ultimate real estate goal is to buy and hold to create cash flow and gain equity for an early retirement but, after these 5 years in San Diego i plan on moving back to Central New York so my concern with getting into MFH here is trying to manage the property from the other side of the country. Whereas if I got into SFH then i could sell before I leave. Maybe there is a flaw to this train of thought but, as a beginner investor I'm not sure if i will be prepared to be a landlord from 2,000 miles away with only one property owned.

20 Years Old, Soon Moving into My First Place. Advice?

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