What do I do? Advice needed.

Question

Hey, I'm from the Portland, Oregon / Vancouver, WA area. I am 20 years old. I have no debt and saved up about 30k cash. I want to be a real estate investor and I was debating on buying a real estate program and what not, but after listening to the podcasts by biggerpockets, I don't believe getting a program is a wise decision but rather taking action in real estate. I am looking to make a deal and get going. I am able to get my hands dirty or what is necessary. My goal is to get $8,000 in passive income in 2 years. I don't like to limit myself so I'm dreaming big. I currently am not employed so I want to go all in. I have no experience in real estate. Where do I start? What do I do? To build capital, I could flip in the beginning or whatever is wise to do. What advice do you guys have. Anything helps! Anyone in my area willing to meet up for coffee or lunch to just chat? Thank you guys!

- Art

Tyson Cross · Answer

I agree with a lot of what is being said here. For me, 6 years ago, I wanted and still want the same thing you are looking for, so the best way for me to jump in was to get a job in real estate. Because I had another completely separate career, I had to start at the bottom. But I also knew what kind of real estate I wanted to be in. So from there I talked to everyone I knew, cold called brokers, took them to coffee, did ride alongs, got on BP, reached out to people, read a lot, studied everything I could get my hands on etc. I really put myself out there.It took almost a year from the time I decided that to breaking into the industry. Now, I am in my 3rd year of successful multifamily brokerage here in Portland, have flipped a sfr and several mobile homes and on my way to buying my first mobile home park.If I were in your shoes this is what I would do. Keep the 30k in the bank and keep saving. Figure out what kind of real estate you like or have an interest in. I know this will likely change over time, but for now read read read and try to come up with some direction you want to go. From there, go talk to as many people in that field and try to get a job in the field. For me, I broke in as a commercial property manager. I knew it wasn't ultimately what I wanted to do, but it was a stepping stone. You need the first stepping stone.You are 20 and are so young. And it's amazing that you are starting this early. BUT don't go spend the 30k and try to do deal yet. Save it, learn and get in the industry. Second, the market is extremely expensive now and finding the right deal takes time. Build that 30k until you have 100k and know what you want to do. But most importantly have patience and take the time to gain enough knowledge and education about what you are doing so you know you are making a good choice. What I would do for sure is take some of that money and invest in yourself. Go to some conferences, sales training etc. Happy to get coffee with you if I can help. Good luck

Linda S. · Answer

I don't know what programs you're talking about, but I'd definitely advise against them. If you have that much in cash, IMO your best option is to put a down payment on a multi-family and house hack, as that'd require only 3-5% down if it's your primary residence with a FHA loan. It'd be a low down payment, and you could use the $30K to do renovations, and make them higher end units and rent for more. In the next few years, you should work hard to establish credit for yourself, so you can have additional funds for renovating. Good luck!

Account Closed · Answer

Awesome response, @Tyson Cross, you could not have said it better.

Bill Ayers · Answer

I agree fully with Tyson Cross.

Austin Youmans · Answer

@Arthur Ryapolov, you need a job or some form of income so that lenders know you have the ability to pay the loan payments.

John Mathewson · Answer

@Arthur Ryapolov congrats on getting started and being serious about it. The first step I took when I was getting started as a 23 year old was to get my real estate license. This was the best way for me to get a foot in the door and one of the cheapest ways to get a great education as well as make some extra cash along the way. That opened up a ton of doors for me in the business. Hope that helps some, if I can help any more please let me know. Best of luck keep your head down and kill it.

Steve Milford · Answer

What @Tyson Cross said. Keep your money in the bank, and find another source of income to keep growing that pot. Get the real estate license, then interview brokerages to find one that suits your fancy. All of them will offer contracts to you if you are a go-getter. Your first deal should be regarding your employment contract. Find one with a style you like. I like the School of Hard Knocks. Others like lots of formal training. Every brokerage has their own business model, and you will be surprised of the variety once you start talking to many. Then work on looking at inventory, and talk to as many people as you can.When I started in this business, I had and still have a FT job separate from real estate. Why? I found that I have a low tolerance for risk, and more importantly I like shorter sales cycles. In addition, having a job creates peace of mind to make sure the mortgage is paid. Yes, no job is guaranteed, although finding just the right "deal" is as much a risk. It allows me to focus on what I love about real estate, helping people make money or find good deals, and it allows me to be patient building my business. The biggest curse and blessing with real estate is that you are your own boss. No one is responsible for your failures but yourself.Regarding the shorter sales cycle, I now see much less risk comparatively and greater ROI to flipping than I do with buy and hold. I initially didn't think that. If you haven't seen it yet - the market here is getting softer...more and more people are not getting financing like they thought. More and more homes are coming BACK onto the market. If you don't see this or other trends then wait until you see it. When I first started in this business, a little more than a year ago, I thought I wanted one thing and realized after being in it that I really want something different. I enjoy the negotiation of the deals the most, ironically, so the more transactions I can do, more fun for me. By working in the business you also might find a unique niche. I thought that I would focus one area and that is not how it has worked out either. And if you become a Realtor, ignore what you hear about 'how long' it will take you to find your first deal. My first paycheck came 3 months after getting licensed. You have to hustle, but it will come.I am willing to connect if your up for it.

Kuba F. · Answer

@Arthur Ryapolov Way to go starting out with your financial life in order. You should get a job AND a real estate license. In order to secure financing you'll need to show 2 years of stable income, even with your credit. If you're just starting as a realtor, then you're not going to sell anything for the first 6 months, and later it's not that stable of an income unless you really hustle.

Neal Collins · Answer

Gaining experience through mentorship and experience may be just as big if not bigger than pulling the trigger on your first investment property. You've got lots of options, just follow whichever interests you. I'll second what Steve B. said--getting a real estate license is a great tool for the tool belt. Once you learn how to hustle and figure out the ins and outs of the industry you can make good money while having a more broad stance than just being an investor. I also which I had more hands on construction experience and would really have liked to have hooked up with an investor/contractor at your age. It's such a competitive advantage to know the ins and outs of construction, costs, timelines and management, not to mention you can build up a great Rolodex of tradesmen. If you're interested in rentals then a property management company may be a good route to go. If you're good with people leasing agents are worth their weight in gold (although under compensated). Property management is really system building and bookkeeping which are great skills to have. A lot of people will jump on me on this forum for suggesting more formal education, but I can tell you that you can have a great career in real estate as a CPA or a lawyer. That path may take up a lot of your time upfront, but it can pay off in spades later on when you have an expertise that all investors pay big money for.

Steve B. · Answer

get a real estate license, you have the time and the costs are nominal