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Updated almost 8 years ago on . Most recent reply

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Jordan Coughenour
  • Denver, CO
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23 Year Old College Grad Getting out into the RE World

Jordan Coughenour
  • Denver, CO
Posted

Hello,

As per Josh and Brandon's encouragement on a podcast, I am making a post to get more involvement on the BP community!

A little about me:

I just received a degree in Construction Management from Colorado State University, and I am moving down to Denver this Fall to work for a consulting company doing construction consulting for large commercial and industrial construction projects. I have never owned any property before. I am a newbie.

I want to get going with my own real estate side endeavors that would ideally become my long term passive income.

Here's my finance snapshot:

-single

-$60k/year salary

-$25k student debt

-$16k car loan

-$3k in savings

-$2k credit debt (argh spring break 2016! - paying that off with my $5k signing bonus immediately)

-credit about 680

I met with a real estate agent yesterday and while I was planning on renting for a year, she was making it seem that there are a lot of options for me to get into a house by the end of this year. I also don't want to throw away $900/mo at rent for a year while I could own.

-FHA @ 3.5% down

-A new type of 1% down conventional loan she told me about on single family only

-FHA on single family up to a 4-plex so that I may rent out the other units.

-USDA loan at 0% down on single family home only

What sounds most attractive to me is getting an FHA loan for a du/tri/quadplex in order to create that passive income. However, I don't want to be overleveraged my first year.

The market in Denver and Colorado in general seems to be at a crest, and I don't want to necessarily buy at the top of the market. On the other hand I don't want to pay rent.

If anyone could shed some wisdom on my situation I would love to hear it! I am a sponge and want learn as much as I can to make the best choice. Is it best to just get grounded for a year and save while paying rent? Should I make the leap for a multifamily unit on an FHA loan?

Thanks so much!

Jordan Coughenour

  • Jordan Coughenour
  • Most Popular Reply

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    Jean Bolger
    • Aurora, CO
    1,303
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    Jean Bolger
    • Aurora, CO
    Replied

    You want to be careful about taking on a small multi without reserves, and what you have now is basically zero reserves. Real life story: I helped my sister buy a four unit property this January. Remember that hail storm last week? She had actual holes in the flat roof from that, with massive water damage and two units currently uninhabitable. Yes the insurance will pay for the bulk of it but a typical hail deductible is $2500 and there are a lot of other costs that will be incurred. 

    What would I suggest? Sell your car, buy something used, cheap and practical that will last you a few years. 

    Buy a 2bd 2ba condo somewhere convenient to your new job and get a room mate. Look for something that will have some modest cash flow when you move out. Renting is going to be pretty much as expensive as buying right now, and this way you can be getting in the game and not tossing your money away on rent. I suggest a condo because rather than an SFR for a couple reasons. One is the reserve fund scenario. With a condo your costs are much more predictable- any major issue like a roof or a sewer line will be covered by your HOA payments. Another is that it's actually a lot easier to find a cashflow condo than a cashflow SFR in the area right now. And finally, a condo you can afford will be a lot nicer than any house you could afford on your current budget.

    In a year or two you can move on to another property and keep the condo as a rental or sell it depending on the market and your long term plan.

    You are totally on the right track. I wish I had been thinking like you when I was just out of college!

  • Jean Bolger
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