Should I invest while in school or wait?

Question

Hello, everyone, I am currently a graduate student in the St. Louis area and am looking to start my real estate investment journey. My current income is sufficient enough to cover my living expenses, live comfortably, and put a portion toward savings each month. The rent for my current apartment, though, is roughly similar to single family homes in the area. So, I was wondering if it would be smarter to use the time I have on this current rental lease to start looking for a small multifamily property to buy and house hack (with an FHA loan).

However, when my program ends in roughly 4 to 5 years, I plan on moving back in with my parents (in the Dallas-Fort Worth area) and saving to buy my own place. Should I spend these next few years connecting with investors in the St. Louis area and gaining experience from them before beginning my own real estate portfolio when I move back home or should I start by house hacking while I am still living in MO? Also, if I were to start while in school, are there any preferred areas in St. Louis and the surrounding cities that I should start looking into? I have done general searches for the surrounding cities before, but I am relatively new to the area (as opposed to me having lived in the DFW area for over 2 decades and having particular areas I plan on investing in).

Theresa Harris · Answer

Why not buy a place (assuming you can get a mortgage) and rent rooms out? 5 years is a long time and once you are finished with your grad school and have a job, you can buy another place. If you rent by the room, you should be able to save money for the next place or sell it. My first place was a condo while in grad school for the reasons you mentioned. I rented out the second room. However, I would urge to you be careful about where you buy as not all condos are well run. The one I got was okay at first, but as time went on we had more and more special assessments for repairs. I sold it about 20 years after I bought it and just before they had a massive assessment (think tens of millions of dollars). I was so happy I sold it when I did.

Wale Lawal · Answer

@Lanre AkandeStarting to invest in real estate in St. Louis while planning to move to the Dallas-Fort Worth area can be smart. Think about getting a small place with two to four units using an FHA loan. This way, you can live in one unit for free or very cheaply while you get the hang of being a landlord and grow your money in the property. Meet and talk with people who invest in real estate nearby, and pick areas that have a lot of people wanting to rent, good schools, easy access to public transport, and a chance for the property's value to go up. Get ready for the move by learning all you can about real estate, how to manage property, different ways to pay for it, and what's happening in the St. Louis market. Look into the Dallas-Fort Worth area and start putting money aside, work on making your credit better, and get your finances in shape for more real estate deals in the future.Good luck!

Jonathan Greene · Answer

I think you are set up well to do a combo of what you said. Don't jump too early and start connecting with other investors in the area and meet other people who have house hacked near you. When you hear about their experience as a house hacker and baby landlord, you will know whether it makes sense or not. In general, it could be smart if you have 4-5 years there. You can get appreciation and equity and learn about being a landlord.

Travis Main · Answer

@Lanre Akande While I'm not acquainted with the St. Louis area, I firmly believe it's never too early to embark on your real estate journey. Before taking the plunge, I recommend investing time in educating yourself and connecting with local investors. There's a wealth of knowledge to be gained before making significant moves in real estate.Consider joining a local real estate investors association to start networking with like-minded individuals. Building a solid foundation through networking is crucial for overcoming any obstacles that may arise. Networking becomes particularly vital when investing in areas where you lack expertise. Take advantage of the opportunity to learn from experienced investors who have navigated similar paths and those currently active in the local market. Their experiential knowledge can help mitigate potential risks and propel your success as an investor.

Lanre Akande · Answer

Thank you very much. I'll be sure to reach out to other investors in the area and hear their input.