How do I know what kind of investing is right for me?

[Dylan Ritch]

Hello, I am 23 and have a job with a real estate company. It is a small team and I have been here for about 8 months now. All my coworkers are much older and very wealthy through real estate, all different ways. Flipping, commercial, turnkey, multifamily, etc. I inherited a house last year with no mortgage on it and I really want to get into real estate investing, when I talk to them about it, they always say figure out which kind I want to get into first and then they'll offer me all the advice and help they can. I am just not sure what I want. I want cash flow, low to no long term maintanence (set it and forget it type), and the less risk the better. I feel like renting out multifamily is what I may be looking for with this, if done right can give me cash flow, I can hire a property manager at some point and I am friends with a lot of home improvement companies, and I could either use some money I have saved up to put a down payment or home equity loan for some % I am comfortable with and pay both off as fast as I can and repeat. Although, I don't know a lot on the other options and I may enjoy another one more or be a better option for me. How can I learn more about which option I should get into?

[Jonathan Greene]

To be honest, your post is really disjointed. You want something easy (set it and forget it), but then mention multifamily and hiring property management. That is not the path to wealth or time freedom. Being a landlord sucks for the most part because most people go into it thinking it's easy. If you hire PM on your first property, you are just tossing money away. You still have to manage the manager to be successful and you will learn nothing.

Are you living in the house with no mortgage? What are the specs of that house? Can you add an ADU in the back in your area?

[Michael Smythe]

Your coworkers are trying to politely tell you to grow up and figure out what you want to do!

When you were in high school, you probably also had a challenge trying to figure out what you wanted to do after you graduated. 

Here's an easy answer for you: move into the house and rent out the rooms to generate cashflow.

[Dylan Ritch]

[Dylan Ritch]

Quote from @Michael Smythe:

Your coworkers are trying to politely tell you to grow up and figure out what you want to do!

When you were in high school, you probably also had a challenge trying to figure out what you wanted to do after you graduated. 

Here's an easy answer for you: move into the house and rent out the rooms to generate cashflow.

I understand why they want me to figure out which I want to do first, that makes sense and I am in the process of doing that now. That is why I made this post, explaining my situation and asking how I can learn more about my options

[Dylan Ritch]

Quote from @Jonathan Greene:

To be honest, your post is really disjointed. You want something easy (set it and forget it), but then mention multifamily and hiring property management. That is not the path to wealth or time freedom. Being a landlord sucks for the most part because most people go into it thinking it's easy. If you hire PM on your first property, you are just tossing money away. You still have to manage the manager to be successful and you will learn nothing.

Are you living in the house with no mortgage? What are the specs of that house? Can you add an ADU in the back in your area?

I understand what you're saying, I feel I didn't mention anything on time frames. I am fine to learn this stuff and put in the work, but I have been told that this work is very front loaded and that is my goal. I don't mind committing 2-5 years to get everything running and established, so long as by the end of that time frame any portfolio I have is set up in a way to set it and forget it.

I have been living in the home with no mortgage, the house is a 2 bedroom, 1 bath, 1300sqf, and in good condition. I can't add an ADU in the back of the area, there is not enough space.

[Jonathan Greene]

Quote from @Dylan Ritch:

Quote from @Jonathan Greene:

To be honest, your post is really disjointed. You want something easy (set it and forget it), but then mention multifamily and hiring property management. That is not the path to wealth or time freedom. Being a landlord sucks for the most part because most people go into it thinking it's easy. If you hire PM on your first property, you are just tossing money away. You still have to manage the manager to be successful and you will learn nothing.

Are you living in the house with no mortgage? What are the specs of that house? Can you add an ADU in the back in your area?

I understand what you're saying, I feel I didn't mention anything on time frames. I am fine to learn this stuff and put in the work, but I have been told that this work is very front loaded and that is my goal. I don't mind committing 2-5 years to get everything running and established, so long as by the end of that time frame any portfolio I have is set up in a way to set it and forget it.

I have been living in the home with no mortgage, the house is a 2 bedroom, 1 bath, 1300sqf, and in good condition. I can't add an ADU in the back of the area, there is not enough space.

Where is the house? Over time, a good bet would be to save up enough to find a two-family to house hack with lower money down and move there and rent out this one you own outright which would cash flow nicely. 2-1 single-families can be great for mid-term rentals as well which can 1.4-2.5 your cash flow.

[Dylan Ritch]

Quote from @Jonathan Greene:

Quote from @Dylan Ritch:

Quote from @Jonathan Greene:

To be honest, your post is really disjointed. You want something easy (set it and forget it), but then mention multifamily and hiring property management. That is not the path to wealth or time freedom. Being a landlord sucks for the most part because most people go into it thinking it's easy. If you hire PM on your first property, you are just tossing money away. You still have to manage the manager to be successful and you will learn nothing.

Are you living in the house with no mortgage? What are the specs of that house? Can you add an ADU in the back in your area?

I understand what you're saying, I feel I didn't mention anything on time frames. I am fine to learn this stuff and put in the work, but I have been told that this work is very front loaded and that is my goal. I don't mind committing 2-5 years to get everything running and established, so long as by the end of that time frame any portfolio I have is set up in a way to set it and forget it.

I have been living in the home with no mortgage, the house is a 2 bedroom, 1 bath, 1300sqf, and in good condition. I can't add an ADU in the back of the area, there is not enough space.

Where is the house? Over time, a good bet would be to save up enough to find a two-family to house hack with lower money down and move there and rent out this one you own outright which would cash flow nicely. 2-1 single-families can be great for mid-term rentals as well which can 1.4-2.5 your cash flow.

 That is exactly what I have been leaning towards doing. The house is in Clementon NJ, which is not the best area for growth imo, but I think there is rental potential as some houses nearby are being rented as well. Plus there is a community college and train station less than 5 minutes away. I think I could save up around 50k for a nice duplex to house hack and if not then I can continue to live in my place and just rent both out. I think 50k would be for a good downpayment and reserves. Would the goal after I get a duplex to use the income streams and my work income to pay it off as soon as possible? I am unsure what the next step for growth when I am ready to grow after that is. Also, would it be a good idea to use a home equity loan for the 50k or does that seem like unnecessary risk since I can probably raise that 50k within one more year?

[Dan H.]

Some comments in no particular order:

- residential RE is not passive even with the use of a property manager. Look at syndications or NNN for more passive options. Notes also unless something goes wrong.
- why has RE been a great wealth builder. Sure it has potential for cash flow, appreciation including forced appreciation, tax benefits, mortgage pay down but in most markets it is the leverage that accounts for the significant return. Unless you plan to sell your home soon, cash out refi it. If a RE value increases at the rate of inflation, you have no gain from appreciation in inflation adjusted dollars without leverage. But if you have it financed at 80% LTV you have achieved 4x return of the inflation rate. Leverage is why RE has historically obtained outstanding returns.
- RE has risk.  Most investing has risk and typically higher return equates to higher risk.  It is really about evaluating risk/return scenarios.  This implies that this zero risk, high return you seek likely does not exist in RE.  

- you are the only one that can determine the correct path for you but with your contacts and desire to scale, value adds should be evaluated.  Note value adds are work and have risk but as I indicated I do not believe what you seek exists in RE investing.  RE investing has risks.   Most RE options are not passive.  

Good luck

[Dylan Ritch]

Quote from @Dan H.:

Some comments in no particular order:

- residential RE is not passive even with the use of a property manager. Look at syndications or NNN for more passive options. Notes also unless something goes wrong.
- why has RE been a great wealth builder. Sure it has potential for cash flow, appreciation including forced appreciation, tax benefits, mortgage pay down but in most markets it is the leverage that accounts for the significant return. Unless you plan to sell your home soon, cash out refi it. If a RE value increases at the rate of inflation, you have no gain from appreciation in inflation adjusted dollars without leverage. But if you have it financed at 80% LTV you have achieved 4x return of the inflation rate. Leverage is why RE has historically obtained outstanding returns.
- RE has risk.  Most investing has risk and typically higher return equates to higher risk.  It is really about evaluating risk/return scenarios.  This implies that this zero risk, high return you seek likely does not exist in RE.  

- you are the only one that can determine the correct path for you but with your contacts and desire to scale, value adds should be evaluated.  Note value adds are work and have risk but as I indicated I do not believe what you seek exists in RE investing.  RE investing has risks.   Most RE options are not passive.  

Good luck

One option I have considered is selling the house and downsizing as it is more than what I need to live. But I might not if it does not make sense to. I know a bit about refi, but can you explain more about that and how I could potentially leverage this? When I say low risk I guess I am more trying to say I don't want to risk losing the house, at the end of the day I will evaluate the risk level of any options and make my decision based on comfort levels. Also I know one rental property isn't enough cash flow with a property manager, but if years down the line if I have 4-5 properties, I feel then it should be enough cash flow to justify a property manager? Also can you expand on what NNN is?

[Dan H.]

Quote from @Dylan Ritch:

Quote from @Dan H.:

Some comments in no particular order:

- residential RE is not passive even with the use of a property manager. Look at syndications or NNN for more passive options. Notes also unless something goes wrong.
- why has RE been a great wealth builder. Sure it has potential for cash flow, appreciation including forced appreciation, tax benefits, mortgage pay down but in most markets it is the leverage that accounts for the significant return. Unless you plan to sell your home soon, cash out refi it. If a RE value increases at the rate of inflation, you have no gain from appreciation in inflation adjusted dollars without leverage. But if you have it financed at 80% LTV you have achieved 4x return of the inflation rate. Leverage is why RE has historically obtained outstanding returns.
- RE has risk.  Most investing has risk and typically higher return equates to higher risk.  It is really about evaluating risk/return scenarios.  This implies that this zero risk, high return you seek likely does not exist in RE.  

- you are the only one that can determine the correct path for you but with your contacts and desire to scale, value adds should be evaluated.  Note value adds are work and have risk but as I indicated I do not believe what you seek exists in RE investing.  RE investing has risks.   Most RE options are not passive.  

Good luck

One option I have considered is selling the house and downsizing as it is more than what I need to live. But I might not if it does not make sense to. I know a bit about refi, but can you explain more about that and how I could potentially leverage this? When I say low risk I guess I am more trying to say I don't want to risk losing the house, at the end of the day I will evaluate the risk level of any options and make my decision based on comfort levels. Also I know one rental property isn't enough cash flow with a property manager, but if years down the line if I have 4-5 properties, I feel then it should be enough cash flow to justify a property manager? Also can you expand on what NNN is?

Your questions tell me you have a lot of RE educating before you are ready.  I mean no insult, everyone starts there.  

When you have a loan on an RE, you have it leveraged meaning you "own" it without having "paid" the full cost. Let's use fictitious $100k property (we will ignore closing costs for this example) that goes up 10% total (this is less than 5% annual due to compounding) in 2 years. If you invested $100k you made 10% ($10k on $100k invested) but if there was 7% inflation you made just under 3% in inflation adjusted dollars from the appreciation. Now in you had a loan at 80% LTV (typical max leverage on non owner occupied SFR) then you only had invested $20k. So you made 50% from appreciation ($10k of $20k invested).

Leverage allows RE to produce inflated returns.  S&P and RE have about the same gain in recent times, but the ease of leveraging RE has allowed it to produce better return (but less passive).  

triple net (nnn) lease is a typically commercial lease where tenant is responsible for all maintenance/cap ex and usually tax and insurance.  These are usually valued largely based on the strength of the tenant and the lease.  For example if you have an in-n-out or Starbucks with a 10 years left on a NNN lease with 4% annual rent increase that is very low risk.  You will have little effort for the next 10 years of having rent show up in your account.  Of course low risk typically equates to low margins but passive for duration of lease for as long as tenant performs.  Recognize in-n-out and Starbucks are near best case tenants.  The reality is most tenants are not as low risk and therefore should have better margins.  

best wishes

[Dylan Ritch]

Quote from @Dan H.:

Quote from @Dylan Ritch:

Quote from @Dan H.:

Some comments in no particular order:

- residential RE is not passive even with the use of a property manager. Look at syndications or NNN for more passive options. Notes also unless something goes wrong.
- why has RE been a great wealth builder. Sure it has potential for cash flow, appreciation including forced appreciation, tax benefits, mortgage pay down but in most markets it is the leverage that accounts for the significant return. Unless you plan to sell your home soon, cash out refi it. If a RE value increases at the rate of inflation, you have no gain from appreciation in inflation adjusted dollars without leverage. But if you have it financed at 80% LTV you have achieved 4x return of the inflation rate. Leverage is why RE has historically obtained outstanding returns.
- RE has risk.  Most investing has risk and typically higher return equates to higher risk.  It is really about evaluating risk/return scenarios.  This implies that this zero risk, high return you seek likely does not exist in RE.  

- you are the only one that can determine the correct path for you but with your contacts and desire to scale, value adds should be evaluated.  Note value adds are work and have risk but as I indicated I do not believe what you seek exists in RE investing.  RE investing has risks.   Most RE options are not passive.  

Good luck

One option I have considered is selling the house and downsizing as it is more than what I need to live. But I might not if it does not make sense to. I know a bit about refi, but can you explain more about that and how I could potentially leverage this? When I say low risk I guess I am more trying to say I don't want to risk losing the house, at the end of the day I will evaluate the risk level of any options and make my decision based on comfort levels. Also I know one rental property isn't enough cash flow with a property manager, but if years down the line if I have 4-5 properties, I feel then it should be enough cash flow to justify a property manager? Also can you expand on what NNN is?

Your questions tell me you have a lot of RE educating before you are ready.  I mean no insult, everyone starts there.  

When you have a loan on an RE, you have it leveraged meaning you "own" it without having "paid" the full cost. Let's use fictitious $100k property (we will ignore closing costs for this example) that goes up 10% total (this is less than 5% annual due to compounding) in 2 years. If you invested $100k you made 10% ($10k on $100k invested) but if there was 7% inflation you made just under 3% in inflation adjusted dollars from the appreciation. Now in you had a loan at 80% LTV (typical max leverage on non owner occupied SFR) then you only had invested $20k. So you made 50% from appreciation ($10k of $20k invested).

Leverage allows RE to produce inflated returns.  S&P and RE have about the same gain in recent times, but the ease of leveraging RE has allowed it to produce better return (but less passive).  

triple net (nnn) lease is a typically commercial lease where tenant is responsible for all maintenance/cap ex and usually tax and insurance.  These are usually valued largely based on the strength of the tenant and the lease.  For example if you have an in-n-out or Starbucks with a 10 years left on a NNN lease with 4% annual rent increase that is very low risk.  You will have little effort for the next 10 years of having rent show up in your account.  Of course low risk typically equates to low margins but passive for duration of lease for as long as tenant performs.  Recognize in-n-out and Starbucks are near best case tenants.  The reality is most tenants are not as low risk and therefore should have better margins.  

best wishes

 I agree I do still have a lot to learn, which is why I am here and in the starting out category. I want to learn as much as I can and don't plan on making any moves until at the very least the start of 2025, but that is only if I feel confident.

Thank you for explaining those things, I am still a little confused about the loans. So what I think you are is just letting the property appreciate barely or might not keep up with inflation. That it is better to take a loan at 80% LTV and invest that? I feel like I am misunderstanding that

[Paul Azad]

You are way ahead of 99% of real estate investors for the age of 23. Many in their 50s have no idea what they want to do when they "Grow Up", we call them elected politicians:) So keep being interested. Keep learning. Watch YouTube videos. Buy some books. Read them several times. Join a local real estate investment association REIA, and go to their meetings. (MeetUp.com) Start meeting other investors, learn from them, and then use leverage as your friend in order to magnify your gains.

Generally, because leases are renegotiated. You can justifiably increase the rents if inflation has been going up. And if a long-term lease like we have in commercial real estate, you can schedule increases in the rent rate on a yearly or biennial basis, either at a fixed negotiated rate like 2% or linked to the CPI or consumer price index, which in 2022 was up 9% and this past year was up only about 4% but traditionally is up only one or two percent a year. (you write this into the lease) Leverage, leverage, leverage is as important as location, location, location when it comes to real estate. Right now, borrowing costs are higher than they've been in 30 years, so it's OK to wait a bit to make a purchase (ie. it may be hard to find a good deal today). Borrowing costs should come down as the economy is slowing down now due to the high fed funds rate (5.33%) particularly in the multifamily space which has an enormous supply coming online across the country this year and next year. There should be very good opportunities to buy potentially distressed multifamily assets one to two to three years from now.

Find property in a good location, at a good price, and at a good point in the real estate and business cycle, with the most leverage you can get, ie. the lowest down payment are some of the keys to success, whether its residential real estate or commercial.

and don't beat yourself up when you screw up, which you of course will, many times. That's just mandatory tuition to the School of Hard Knocks. Remember in Life and Real Estate you can either "Win or you can Learn."

I only do syndication investing but there are many experts on BP forums here that can show you how to get 10% down, or even lower through FHA loans etc, so your leverage is 10X or 20X. You have no total control long term over the appreciation of your real estate, that's more up to the neighborhood/demographics/economy/supply-demand/inflation rate etc. You can though buy well and maintain well and lease well and hopefully sell well. Historically RE appreciates even better than the long term inflation rate, as it has especially the last 15 years, since Great Financial Crisis. So imagine if property appreciates only 2% in a bad year but you have 20:1 leverage?

and then there's the tax benefits, WOW oh WOW - good luck :)

[Theresa Harris]

You want low maintenance-so go with a house that needs minimal work to rent it long term.  If you want a multifamily, it will have a higher entry point.  Getting a good PM would also go with your wanting to do less, but it will cut into your cash flow.  Having said that, if you don't know what you are doing a good PM may save you time and money.  Not all PMs are the same.

You can also look at buying a place with a legal suite or a duplex-you can live in one unit and rent the larger unit or the unit that will give you the most rent.

Narrow it down to a few options and then ask them for pros and cons of each after you've made your own list of pros and cons.   Also don't confuse having lots of properties with being wealthy-a number of people may have lots of rentals, but they are mortgaged to the max (because that is how they prefer it) and therefore don't have as much money as you think they do.

When looking at places, remember the type of house you buy will determine the type of tenant you get.  Buy a cheap house in a tough area, the numbers on paper may look good, but you will have higher operating costs and more headaches (generally speaking) as opposed to buying a solid house in a good area.

[Dan H.]

Quote from @Dylan Ritch:

Quote from @Dan H.:

Quote from @Dylan Ritch:

Quote from @Dan H.:

Some comments in no particular order:

- residential RE is not passive even with the use of a property manager. Look at syndications or NNN for more passive options. Notes also unless something goes wrong.
- why has RE been a great wealth builder. Sure it has potential for cash flow, appreciation including forced appreciation, tax benefits, mortgage pay down but in most markets it is the leverage that accounts for the significant return. Unless you plan to sell your home soon, cash out refi it. If a RE value increases at the rate of inflation, you have no gain from appreciation in inflation adjusted dollars without leverage. But if you have it financed at 80% LTV you have achieved 4x return of the inflation rate. Leverage is why RE has historically obtained outstanding returns.
- RE has risk.  Most investing has risk and typically higher return equates to higher risk.  It is really about evaluating risk/return scenarios.  This implies that this zero risk, high return you seek likely does not exist in RE.  

- you are the only one that can determine the correct path for you but with your contacts and desire to scale, value adds should be evaluated.  Note value adds are work and have risk but as I indicated I do not believe what you seek exists in RE investing.  RE investing has risks.   Most RE options are not passive.  

Good luck

One option I have considered is selling the house and downsizing as it is more than what I need to live. But I might not if it does not make sense to. I know a bit about refi, but can you explain more about that and how I could potentially leverage this? When I say low risk I guess I am more trying to say I don't want to risk losing the house, at the end of the day I will evaluate the risk level of any options and make my decision based on comfort levels. Also I know one rental property isn't enough cash flow with a property manager, but if years down the line if I have 4-5 properties, I feel then it should be enough cash flow to justify a property manager? Also can you expand on what NNN is?

Your questions tell me you have a lot of RE educating before you are ready.  I mean no insult, everyone starts there.  

When you have a loan on an RE, you have it leveraged meaning you "own" it without having "paid" the full cost. Let's use fictitious $100k property (we will ignore closing costs for this example) that goes up 10% total (this is less than 5% annual due to compounding) in 2 years. If you invested $100k you made 10% ($10k on $100k invested) but if there was 7% inflation you made just under 3% in inflation adjusted dollars from the appreciation. Now in you had a loan at 80% LTV (typical max leverage on non owner occupied SFR) then you only had invested $20k. So you made 50% from appreciation ($10k of $20k invested).

Leverage allows RE to produce inflated returns.  S&P and RE have about the same gain in recent times, but the ease of leveraging RE has allowed it to produce better return (but less passive).  

triple net (nnn) lease is a typically commercial lease where tenant is responsible for all maintenance/cap ex and usually tax and insurance.  These are usually valued largely based on the strength of the tenant and the lease.  For example if you have an in-n-out or Starbucks with a 10 years left on a NNN lease with 4% annual rent increase that is very low risk.  You will have little effort for the next 10 years of having rent show up in your account.  Of course low risk typically equates to low margins but passive for duration of lease for as long as tenant performs.  Recognize in-n-out and Starbucks are near best case tenants.  The reality is most tenants are not as low risk and therefore should have better margins.  

best wishes

 I agree I do still have a lot to learn, which is why I am here and in the starting out category. I want to learn as much as I can and don't plan on making any moves until at the very least the start of 2025, but that is only if I feel confident.

Thank you for explaining those things, I am still a little confused about the loans. So what I think you are is just letting the property appreciate barely or might not keep up with inflation. That it is better to take a loan at 80% LTV and invest that? I feel like I am misunderstanding that

I will use an analogy you invest $20 to
make $10 in 2 years versus investing $100 to
make $10 in 2 years.  In both cases younhave made $10 but in one case the return on investment is much greater than the other.  

now same thought but each Dollar equates to $1k dollars.  Similar math show investing $20k to obtain $10k of growth in 2 years  versus $100k to obtain $10k of growth in 2 years.  Both have resulted in $10k of growth but the lower investment amount for the growth equates to better return.  

now recognize at 80% LTV you can purchase a $100k investment property for $10k (ignoring closing costs).  If you actually had $100k to invest you could purchase 5 properties (more likely 4 if accounting for closing costs) or purchase the one and put rest in another investment achieving a return. 

conventional rates are near 20 year high but conventional rates are still the cheapest money around (other than potentially friends and family).  There are many investment options that should be able to outperform conventional loan cost over the long term.  S&P historically is near 10% return but for last decade is near 12%.  Not saying this is best option but if you took out conventional loan at 6.5% and earned 12% you passively made 5.5% on money that is currently not optimized in your home.  As the example showed, leveraged RE typically outperforms unleveraged S&p by a large margin. 

lots to learn but you currently have an unleverage RE asset but want to start in RE investing.  You have the money trapped in an RE that can be used to purchase near term assuming you qualify for the loan.  I suggest you educate thoroughly.  Pick a RE path that looks promising and interesting to you.  Then use some of that trapped equity to get started.    

good luck

[Nicholas L.]

@Dylan Ritch

there is basically no cash flow right now in long term rentals.  not in NJ.  not anywhere.  and that's OK.  if you want risk free cash flow... that's a savings account.

if i were you'd house hack, several times in a row.  if you're willing to put up with the pain and inconvenience - moving every 1-3 years, living in the smaller / worse units, DIYing things - you could have a portfolio of 5-20 units in 10 years, just by using your house payment.

maybe the house you have would be an OK rental.  maybe not.  call some lenders, talk to some property managers, post very specific questions on BP.

hope this helps

[Sarita Scherpereel]

I agree with what's been said. Just want to add that house hacking is the regret to any investor that I've talked to that didn't go it. Because of the low down payment it is a great way to get experience while getting started. 

[Wale Lawal]

@Dylan Ritch

Real estate investing can be a challenging decision, but with a structured approach, educate yourself on different investments, analyze your goals, gain practical experience, network, and plan financially. Start small and scale up as you gain experience and confidence. Seek guidance from coworkers and learn by doing, as it's often easier to learn through experience.

Good luck!

[Nathan Gesner]

Quote from @Dylan Ritch:

Your problem appears to be analysis paralysis. You want the perfect answer, then you'll take steps.

Go back to those other investors and ask them what their first investment was and what lessons they learned from that. I bet most of them bought something cheap that required hard work. That's where you should start.

Quit trying to figure out the best plan. Figure out how to buy something now. Whatever you can afford that makes sense. You'll figure the rest out as you go.

[Jonathan Greene]

Quote from @Dylan Ritch:

Quote from @Jonathan Greene:

Quote from @Dylan Ritch:

Quote from @Jonathan Greene:

To be honest, your post is really disjointed. You want something easy (set it and forget it), but then mention multifamily and hiring property management. That is not the path to wealth or time freedom. Being a landlord sucks for the most part because most people go into it thinking it's easy. If you hire PM on your first property, you are just tossing money away. You still have to manage the manager to be successful and you will learn nothing.

Are you living in the house with no mortgage? What are the specs of that house? Can you add an ADU in the back in your area?

I understand what you're saying, I feel I didn't mention anything on time frames. I am fine to learn this stuff and put in the work, but I have been told that this work is very front loaded and that is my goal. I don't mind committing 2-5 years to get everything running and established, so long as by the end of that time frame any portfolio I have is set up in a way to set it and forget it.

I have been living in the home with no mortgage, the house is a 2 bedroom, 1 bath, 1300sqf, and in good condition. I can't add an ADU in the back of the area, there is not enough space.

Where is the house? Over time, a good bet would be to save up enough to find a two-family to house hack with lower money down and move there and rent out this one you own outright which would cash flow nicely. 2-1 single-families can be great for mid-term rentals as well which can 1.4-2.5 your cash flow.

 That is exactly what I have been leaning towards doing. The house is in Clementon NJ, which is not the best area for growth imo, but I think there is rental potential as some houses nearby are being rented as well. Plus there is a community college and train station less than 5 minutes away. I think I could save up around 50k for a nice duplex to house hack and if not then I can continue to live in my place and just rent both out. I think 50k would be for a good downpayment and reserves. Would the goal after I get a duplex to use the income streams and my work income to pay it off as soon as possible? I am unsure what the next step for growth when I am ready to grow after that is. Also, would it be a good idea to use a home equity loan for the 50k or does that seem like unnecessary risk since I can probably raise that 50k within one more year?

I don't think mid-term would work there for the 2/1, but it could with insurance companies for home displacement. But, the best thing about 2/1 single-family homes is that you can rent them for almost the same as 3/1 single-family homes so the scale per value is better for rent. I would focus on looking for duplexes in the area as you save more. I wouldn't take a loan on the one you own outright yet because you will mitigate the cash flow. You have a place to live that you got for free, that can be a great springboard.

[Peter W.]

Unfortunately, you won’t know until you try. Residential is probably the lowest barrier to entry—especially with house hacking—so I would start there. Try a house hack or live in flip and see what went right and what went wrong. Find out what you liked and didn’t like. If residential isn’t for you, you’ll be able to 1031 into your first commercial deal.

[Account Closed]

Quote from @Dylan Ritch:

Hello, I am 23 and have a job with a real estate company. It is a small team and I have been here for about 8 months now. All my coworkers are much older and very wealthy through real estate, all different ways. Flipping, commercial, turnkey, multifamily, etc. I inherited a house last year with no mortgage on it and I really want to get into real estate investing, when I talk to them about it, they always say figure out which kind I want to get into first and then they'll offer me all the advice and help they can. I am just not sure what I want. I want cash flow, low to no long term maintanence (set it and forget it type), and the less risk the better. I feel like renting out multifamily is what I may be looking for with this, if done right can give me cash flow, I can hire a property manager at some point and I am friends with a lot of home improvement companies, and I could either use some money I have saved up to put a down payment or home equity loan for some % I am comfortable with and pay both off as fast as I can and repeat. Although, I don't know a lot on the other options and I may enjoy another one more or be a better option for me. How can I learn more about which option I should get into?

 Two questions: 

How much you want to spend on marketing, if any?

How much do you want to gross per month?

Don't get trapped with BRRRR and long term investment, where they sell you 200 houses with no cash flow that will appreciate in 50 years.

You are right on point looking for fast turn around and cash flow. So, answer the first two questions and I will try to give you straight to a point answer, with no judgment or meddling in your personal affairs. 

[Nelisa Lee]

Quote from @Dylan Ritch:

Hello, I am 23 and have a job with a real estate company. It is a small team and I have been here for about 8 months now. All my coworkers are much older and very wealthy through real estate, all different ways. Flipping, commercial, turnkey, multifamily, etc. I inherited a house last year with no mortgage on it and I really want to get into real estate investing, when I talk to them about it, they always say figure out which kind I want to get into first and then they'll offer me all the advice and help they can. I am just not sure what I want. I want cash flow, low to no long term maintanence (set it and forget it type), and the less risk the better. I feel like renting out multifamily is what I may be looking for with this, if done right can give me cash flow, I can hire a property manager at some point and I am friends with a lot of home improvement companies, and I could either use some money I have saved up to put a down payment or home equity loan for some % I am comfortable with and pay both off as fast as I can and repeat. Although, I don't know a lot on the other options and I may enjoy another one more or be a better option for me. How can I learn more about which option I should get into?

You've already received tons of great advice in this thread. But, just wanted to chime in. First off, the fact that you're already in online threads seeking education and advice at the age of 23 is amazing! I would say that the best way to figure out what option to get into is to just start with one. Don't think you need to pick the perfect path now. Many investors journeys are never a straight line and where you start and where you end up might be totally different and that's ok! One of my first investments was a 40-unit apartment complex and I quickly realized that I preferred single-family homes. I sold that complex and now only invest in single-family homes. Your experiences over time will mold the type of investor you become.

I would warn that the idea of a "set it and forget it" with most real estate investments is not reality even with great management in place. My advice would be to find what fits your interests and to talk to as many other investors as you can. Learn from their experiences and why they chose certain paths. You might find one of their stories resonates and gives you something to start to work towards. 

[Shawn Mcenteer]

Hi @Dylan Ritch sounds to me like house hacking may be a really smart and lucrative way to go.  Ill let you owner occupying multi family properties is what got my wife and I to FI, what makes house hacking so great is the baby steps to  becoming a full time real estate investor.  Learning to be a PM is not a hard task.  I have self managed for over a decade now and yet to miss a single payment of rent, to hire out PM and have them take 8% when I have a team in place to handle anything that goes wrong is not worth it.  Finding the right property eliminates the majority of hassle you'll get as landlord. Happy to share the systems and techniques that work in New Jersey and help map out a plan that can get you on your path way to FI.