Minimum Income to start investing???

Question

I'm 18 and my goal is to own 10 units by 26 years old. How much income should I be making to start? I'm going to college for Business Administration Marketing. I'll be done in 3 years. I'll be taking about 20k in loans.

Brian Mathews · Answer

I would not take out student loans or try to keep them at a bare minimum by getting a job and work your way through college.    That will enable you to get started faster on your life's goals.   College loans are an albatross around your neck.    Then I'd buy a duplex or 4 plex and live in one of the units and rent out the other.

Brian Mathews · Answer

Your goals are admirable and I'm glad you want to better yourself.    I think maybe you need to focus  a little more and hopefully college will enable you do to that.    Getting a job is easy, you can flip burgers, clean houses, etc....     You mentioned wanting a dream house, opening up your own marketing firm, opening  a luxury rental car business and owning 10 duplexes.    From my standpoint of being twice your age and life has taught me  a few things.   First thing is to get through school with as little debt as possible.   Your best investment is yourself.    If you have college debt, eliminate it as quickly as possible as soon as you enter the workforce.   Focus on your career to get established and start making money.   Then decide where you want to go.   It maybe be real estate, it may be on starting your own business which is as good an investment as real estate or better.   You might meet a nice young lady and decide to start a family, who knows.   Don't rush things, that's when it gets screwed up.

JD Martin · Answer

Ok, I'll continue to play along. Although you didn't mention duplexes in your first post, let's just assume I read your mind and knew that's what you meant. How much is a duplex? Where do you want to buy it? What condition do you want to buy it in? Who's going to do the rehab, or will it be pristine? What are you going to do with these duplexes - hold them for appreciation? Rent them out? AirBNB them? What kind of lifestyle do you want to live in the meantime? Do you want to live in your van while you invest in duplexes, or do you want a skyline condo by the lake?

Get my drift? Your question is akin to asking "Where do we go when we die?" Who can answer this question? 5 duplexes in Cleveland cost less than 5 duplexes in San Francisco. Does Port Colborne, Ontario have duplexes? Do they have 5 of them you can buy by 26?

The better question to ask: why are you going to school and taking out loans for a field that makes "bad money"? Why not go into a field that makes "good money"?

After consulting my rabbit's foot and my lucky 8 ball, I have determined that you'll need half a million dollars to buy 5 duplexes in the next 5 years. :)

Dalton Beauregard · Answer

@Brian Mathews I never plan to get married, I find to be unnecessary and very risky. My parents had a god awful marriage and it really made the idea really unappealing to me.

And I don't want kids until I am financially independent because as harsh as it may seem, children are just walking liabilities. Luckily we have free healthcare.

JD Martin · Answer

Ok! So that was the point of my post - every question should lead you to another question. Essentially you need to reverse engineer this thing, and you need more inputs in order to figure out how to do it.

So, using some of your rudimentary figures, and making up some: If you average $40k per year net income (after taxes), and you can live off of half of that, you will have $20k/annually to do something with. After 1.5 years, you will have 20% down to buy your first $150k duplex. You buy it and fix up the renter's side first, and let's say you manage to rent it for $1000/monthly, but $750 of that goes to expenses - mortgage, loans to fix it, insurance, etc - so you have $250/month to go along with your $20k/annual, so by year 3 you have enough to buy a second unit.

Just using those rudimentary numbers, you can see that you are not going to buy 5 duplexes in 5 years with those numbers. You either need more income, cheaper duplexes, more years, less expenses, or some combination of all.

Dalton Beauregard · Answer

@Jd Martin I don't understand how I didn't give enough information.

I said 10 units because I graduate at 21 and I want to buy a duplex every year over 5 years, 5x2= 10 units.

At the end I'll be 26. That's why.

I didn't say 100 or 1000 because marketing majors make bad money, between 40-70k so I'm wondering how much I'd need to make to reach my goals.

JD Martin · Answer

How did you come up with 10 units by 26? Why 10 and not 1 or 100 or 1,000? I'm not sure how anyone could even answer your question without more information.

Cris Johannsen · Answer

Dalton,

I can't answer your question but applaud your getting started early. I wish I had your drive at that age. Best of luck to you!

Account Closed · Answer

Dalton...

Continue on getting educated right here on BP.  Read all their books, the books that they recommend, listen to all their podcasts (#155 is a good place to start), their webinars, etc.  This is the best place for getting educated.  DO NOT PAY THOUSANDS TO ANY HIGH PRICED "GURU" PROGRAMS OR SEMINARS.

Instead of thinking about how many properties you want to own, think about what you want out of the properties that you own (most of us want cash flow but others have a more altruistic reason for investing in real estate).  You can own 10 crappy properties that bring you nothing but grief or you can own 2 superb paid for and cash flowing properties with long-term tenants that are grateful to live in your house.  Only you can decide the reason and the path that you want for your real estate experience.  There are many different paths to get to where you want to go and you will make mistakes along the way but don't fear the mistakes, they are what help educate you.  Find a Real Estate Investors Group (REIAs) that are educational and make connections with other local investors.  If you find someone successful at what you want to do ask them to work for them in some capacity for free so you can be close and learn from them.

Rich Dad Poor Dad by Rober Kiyosaki was any eye opener for me to start understanding the flow of money and a financial balance sheet.  I recommend his books but not any other high priced product he sells.  If you can find his game CashFlow cheap somewhere, or know someone who owns it, it might be fun for you to play, some people have had "aha" moments while playing.

I would also recommend a sight called Mr. Money Mustache which will give you great ideas about being frugal and how to retire early.  You Need a Budget is a sight that will help you set up a budget and easily keep track of your spending and financial goals.

Good luck with your goals, STAY FOCUSED and don't give up on marriage.  Your parents marriage should emphasize the very importance of finding the right partner and and vetting them early on.  To make any relationship (personal OR business) work you have to know yourself and what your needs/wants are and be very clear and upfront with whomever you are entering a partnership with.  Always look at ways to make things a win/win (even if you don't always "win").  It's a good life and I wish you all the best with your hopes and dreams.

Ming Lim · Answer

@Dalton Beauregard - I started investing at the age of 21. I bought a semi, for $150k and 5% down. A student rental, and roughly three times my income at the time. I didn't buy my own personal residence until almost 10 years later because it made more sense to continue buying rental properties.

I echo the others comments about focus. It's my biggest mistake as an investor. I missed some huge opportunities in my 20's, because frankly, I was too busy chasing girls. Find what you love and focus on it. If that happens to be RE, great.

To answer your question on how much do you need to earn, the best thing to do is find an investor focused mortgage broker. Lending rules in Canada are very dynamic so you really need to ask someone who is an expert in this area.

Good luck!

Minimum Income to start investing???

Most Popular Reply