Investing with Low Capital and Little Experience

[Michael Pelant]

Hi All, Just for some background info, I am a 22 year old college student with a bank account representative of your average college student. I have approximately 3 years of experience in real estate, initially working with a large property management company in Chicago and transitioning into retail brokerage. I am a licensed broker in the state of IL and am pursuing an MSRE degree. My father has extensive knowledge in development as well. That being said, my brother and I have a whopping $25k to invest in real estate. My first question, would you recommend a traditional (20% down) mortgage or possibly an FHA loan that would allow for approximately 3% down? What qualifications must be met to obtain an FHA loan and does this correlate to much higher interest rates? My second question, what are the pros/cons of investing in commercial real estate as an initial investment? Obviously increased capital requirements will be a concern, but from my limited experience, commercial RE seems to be just as stable and way less of a headache (no calls at midnight about a clogged toilet, etc). Any additional tips or recommendations would be great. I am eager to get started, I just want to clarify certain aspects before jumping into the deep end.