What should I do to start investing in real estate with no experience?

Question

Hello everyone! I'm 21 years old and I want to start investing in real estate. The problem is I work a part time job and only make about $1,100 a month, which is nothing! It will take me forever to save for a down payment for a house. So I thought on becoming a police officer in the meantime, they make about $50,000 a year in my area. I think I have a chance on saving money a whole lot faster. But I will have to wait 2-3 years to come up with a good $20,000-$25,000 down payment. What should I do?? Become a police officer and save as much money as possible? Or are there more options out there for me right now as a 21 year old to start investing, besides bank loans? Basically my goal is to buy a house with the down payment, and then put it for rent asap, so the house can pay itself from tenants in the long run.

Japheth Grimm · Answer

The best advice is the same that's been going around for years. That is, find a local REIA, network with investors, and find those who are willing to mentor you or at least keep in touch on a regular basis. Here's a list of REIAs to reference: http://www.mynationalreia.com/clubportal/795files/Directory.cfm?clubID=795&statevalue=TX When finding mentors, make sure they have a good reputation within the REIA and other networks. If someone wants you to pay them for mentoring, find someone else. For an investor to be willing to help you learn, you've got to make it worth their while. Some people are surprised that this means you "work for free", but what's really going on is you're getting a free education through experience. For instance, right now I've got a guy who is your age that is more or less our shadow. This guy has been working with my team and a few other investors for the past two months, learning as much as he can. Our deal with him is that we give him access to our Google calendar and if he wants to come with, he tells us at least a day in advance and shows up two hours ahead of time. If things start in the morning, we'll pick him up and he'll spend the entire day with us. Most of the time he does busy work and observes, but lately he's been participating hands on in some of our deals. Since he's been busting his butt with us (not for us), other investors have seen his work ethic. Because of this, he's gained access to more resources for free; the same resources that other people are paying for (ie: services, workshops, classes, field training, webinars, books, etc.). When he hears about an event, he finds out who's hosting and offers to show up early, make coffee, direct traffic, greet people, distribute materials, or whatever busy work they don't want to do. Most of the time, people are paying money to attend. These hosts aren't paying him to work the event, but he's not paying to be there either. It can make for a long day but, for him, the educational and networking opportunities are becoming endless. This coming week, we'll be working out some details concerning him partnering with my team on his first few wholesale deals using our leads and marketing. Even though we're going to split the payout, he's still going to get a nice check from putting what he's learned to work for him. Since he's already proved that he can perform to potential end buyers, not to mention he's well aware of what they want in the first place, he should have no problem turning deals. Heck, he's already been told by some investors that once he gets some deals down, he'll have access to their private lending money. Not bad! Bottom line: Gaining access to education, mentoring, and other people's money is the way to go if you're going get serious about real estate investing. All it's going to cost you is a lot of time and a bunch of elbow grease at first, but the payout is huge if you're consistent.

Jaren Barnes · Answer

Hi Luis! I'm only a bit older than you at 22, and what I decided to do was to pursue a "job," in the real estate industry so I could learn as I built capital to invest. Now there is a give and take in doing this, most positions in real estate are 100% commission, which means you may have to wait (or keep your part-time job on the side while working around the clock) before seeing a pay day starting out. For example, I've been working full time for 6 months and have 9 properties under contract but they're all in shortsale process, so I've not made any money yet. I have a good $27 - $45K coming (3-5K per house depending on the final purchase price) and my pipeline is continuing to build, but I'm not going to lie, it's been a rough first 6 months. What I'd suggest you do first is figure out what type of investing you're interested in and then seek out someone in your area active in that investing niche. Then try to get a sit down with them and ask, "How do most people get started in X investing?" Then actually do everything they tell you to do. There are a lot of ways to supplement your income while you pursue real estate full time, if that was something you wanted to do. Hope this helps!

Paul Timmins · Answer

@Luis Gutierrez Welcome. I am a little biased 35 yrs in law enforcement. Flexible schedules and overtime are good, however it is not for everyone. Education is power get as much as possible. See below. 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. Here you will meet wholesalers who provide deals and all the cash buyers (rehabbers) you will need. 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

Aaron Keckley · Answer

I am a young investor as well. I would say save as much as you can. But look into an FHA loan that only needs 3.5% down. Do your research and network. Coming up with a down payment won't be as hard as you think. Good luck!

Luis Gutierrez · Answer

Thank you guys for the feedback. I really appreciate it! The type of investing I'm more interested in is multi-family residential properties. I want to buy to rent, and generate a passive income.

Solomon Oh · Answer

Hey Luis- Welcome to bigger pockets! You do seem to have a good game plan and the right idea about investing for the cash flow. There are a few creative methods you can look into such as subject to or working with a local rehabber. After learning how to flip, you can do a few flips yourself and save up your down payment for an investment home.There are a few articles on subject to and flipping. I wish you luck!