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Updated over 7 years ago, 07/24/2017
How to Work a Full-Time Job and Start Investing
So, I really want to get involved in real estate investing, preferably buy and holds, but I love my job. What are some things I can do to, at minimum, start getting my foot in the door? I just graduated college this past May an an engineer, so I don't have a whole lot of extra cash to buy a house yet... What are some ideas? Through the BiggerPockets podcasts, I've heard about seller financing, and financing houses with other peoples money, but I feel like that'd be a little difficult as I have no track record. So please, if you have anything to add, I'd love to hear it, even if you told me to just save 800 bucks a month or something until I had about 10 grand for a down payment.
@Aaron Ray Well done getting started this early. I am also an engineer but did not get started for 7 years out of college. To answer your questions, I think the top 3 things you need to do are as follows.
1. Get educated. Read all you can about the type of real estate investing you want to do. Learn the rental market in your area. For 6 months I looked online at rentals that came on the market and put them in a spreadsheet so I could reference their location, size, and cost later when I wanted to see how much a house would rent for.
2. Build a network. Find a local real estate investment group and attend regularly. Build relationships with the people that are doing what you want to do and build relationships with wholesalers. Wholesalers never have enough buyers so make sure you are specific as to what you want to buy and let them know that.
3. Get your financing in place ahead of time. Talk to banks and get pre approved so your wholesaler will know you are serious.
4. Just do it. Don't get caught in analysis paralysis. Do your research, set a educated minimum requirement for a deal and when that first one comes along buy it and be ready to learn more.
Let me know if you have any other questions and I will be more than willing to help. Also I will shamelessly plug my recent post about what I have done in my first 8 months here as there are other tips in that and hopefully it will help encourage you to get started.
@Aaron Ray - I agree with all of the points that @Ryan Detig brings up.
In my opinion, your first step would be to live a frugal life and save save save! Save until you have enough for your first down payment on a 3.5% down FHA loan. Then house hack your first property.
I highly recommend you read Set for Life. It talks about creative ways to save and the pathway you should take towards financial freedom.
- Craig Curelop
- [email protected]
- Podcast Guest on Show #350
Wow what a great post. This is very helpful and informative and applicable as I have also just turned 30 with 2 kids and a full time job. Great motivation !!!!!
I'm also an engineer but I graduated in May of 16. Im closing on my first property in a week or so and am hopefully able to buy two more before years end.
Step 1 has already been said. You need to save save save. I live as reasonable as possible and save almost half of my post tax income.
Step 2 is educate yourself. You can do that all here on BP. Listen to the podcasts they help a ton.
Step 3 is network and get your team lined up. I'm personally focusing on out of state investing to start (it's not for everyone) and work with realtors, PM and a lawyer and CPA.
Step 4 is simply to do it. Make a goal and stick to it. Start small so you don't overwhelm yourself. Once you meet that goal, make a larger goal.
PM me if you want to talk more.
Caleb
Aaron Ray I am an engineer buying rentals out of state. It's tough but here is some fun.
10 ways to appear engaged at your day job with you are building passive streams of income
1) walk fast and move around frantically – general work areas
2) don’t tell people where your are going on vacation (ie going to Dallas to look at apartments)
3) don’t take calls in your car where people can see you
4) don’t drive a fancy car to work
5) attempt to look like your bring a brown bag to work… Say something like you are being healthy
6) invest in a small compact laptop to analyze deals and emails & Google Drive!
7) use calendar scheduler and VAs to schedule your calls around your work
8) when asked why you are not investing in the company sponsored 401k just say you are a government conspiracy folk… It will be easier to understand
9) just nod and say yes!
10) when you purposely keep your workspace cluttered so you look busy and appear indispensable
(Just for fun!)
House Hacking would be a great start for you! Depends on your current situation, but you can get started in REI with only 3.5% down.
Good for you! It IS hard work, but it can be done. I have a pretty modestly paying day job, but have managed to invest, slowly but surely, for the last decade or so. The best advice I can give you that hasn't been mentioned above is to only take on debt that makes you money- meaning cash flowing property. When you don't have a ton of cash or a ridiculous salary, credit card and car payments will kill your ability to get a loan. Buy a modest car with cash, if you have credit cards, pay off the balance every month and save what you can. Start buying modest cash flowing properties and you'll be shocked at what you've done in 10 years. Good luck!
- Corby Goade
@Ryan Detig Thanks for the help! In your first step, what exactly did you mean by "and cost later when I wanted to see how much a house would rent for"? Are you saying that you would follow a house on the market, and then after it was bought by someone, you would continue to follow it and then see how much they rented it out for?
Can you explain to me why building a relationship with a wholesaler would be beneficial? I've listened to a couple podcasts about wholesaling, but it's not something I fully understand.
Thanks again for your response!
@Craig CurelopThanks for the advice Craig! I live in the D.C. area, so if I ever come across something I could house hack and afford, I'll be jumping on it.
@Steve Bracero House Hacking is definitely something I would like to do, preferably a duplex or atleast a house with separated units. Not really looking to live in the same living quarters as someone else, especially because I don't think my girlfriend would appreciate that haha. I do plan on getting started using an FHA Loan when the time comes.
@Corby Goade Thank you for your insight! That it very helpful information. I understand what you are saying about only take on debt that will make me money.
I do have a credit card, I got it during my junior year of college about 2 years ago, but fortunately, I have ALWAYS paid off the balance each month. I Also bought a car my sophomore year of college, so 3 years ago, and I pay $205 a month and have 2 more years of payments (never missed a payment). I also plan on keeping that car for at least the next 5 years.
Will either of the above make it difficult for me to get a loan? Oh yeah, and I almost forgot, I just graduated college, so I'll be paying some hefty monthly minimum student loan payments soon.
Hey @Aaron Ray- the difficultly of getting a loan will depend on your credit, income and DTI. I didn't mean to imply that if you have a car loan you can't get a mortgage, I'm just speaking conceptually. There are people posting on these boards who are fresh out of college and have a teaching degree, $50k in debt and a $600 payment for a brand new Jeep and they want to know how to get started. In a scenario like that, they are paying more for the car than they would for a rental property- it just shows a lack of financial literacy. Sounds like you have a modest car, but if you have the ability, I'd just plop down the $5 and pay it off and be done with it. The effect it has on your DTI is greater than the effect that your $5k cash reserves would have when applying for a loan.
I have credit cards too, I just don't carry a balance, so I am sure you are good there. Sounds like you have a solid foundation, now it's just a matter of figuring out how to finance deals and finding a GREAT deal for your first one. Best of luck!
- Corby Goade
@Corby Goade Thanks again, I understand what you are saying. I have a good credit score and decent income, but any idea what a reasonable DTI ratio would be?
I was lucky enough to receive a 1% interest on my car loan, what are your thoughts on paying the remaining $5k? Still pay it off now, or keep saving my cash reserves for when I get a house?
If I could do things over, I would do what Craig Curelop is suggesting and save up a bit of cash for a down payment, as little as 3.5% for an FHA loan, then move in and rent out some of the other bedrooms or other units if you buy a multi-unit property. You're young, you have an engineering job, which is probably at least well-paying compared to other jobs a young professional like yourself could have, I assume that you don't have a wife and kids to worry about (my wife definitely wouldn't be on board with the house hacking idea, I imagine that is the general consensus for most), house hacking would be one great way to start!
I would absolutely recommend reading Set For Life right away. I WISH I had the info from that book right out of college. I believe there is life changing information in that book.
Go TERPS!
I would look into what programs the county and state are running for first time homebuyers. I am not sure where your income falls, but there are a lot of affordable housing options especially in Montgomery County. All new construction requires a percentage set aside for affordable housing. You will be limited to how much appreciation you can realize each year, but with a room mate you could cash flow. You will not be able to rent it out as non owner occupied. Nothing would stop you from buying additional properties as your income and experience grows while still living in the house.
Definitely read the Set For Life Book and look into house hacking. That is by far the most straight forward and methodical method for getting started in REI.
Aaron Ray start by househacking. It's not a lot of work and will cut your expenses considerably so you can start to save aggressively.
- Jordan Moorhead
- [email protected]
- 512-888-9122
I'm encouraging my Son who is still in college to start his investing now! plenty of new start ups even College students can afford to invest even $100 in as a Real Estate Crowd investment also plenty of new exotic financing methods to use as well. Earlier this month Tezos dot com raised $235 million in a Crypto Curreny enity now others are launching as well over 700 Initial Coin offerings some in Clean tech others in Real Estate like the token market announces new ICOs. http://www.crowd101.com/top-5-crowdfunding-platforms-equity-investing/https://tokenmarket.net/blockchain/ethereum/assets/real-platform/
@Aaron Ray What I was referring to was that I would document the property and how much it was on the market for and how long it was on the market so that when I had a deal come up I was thinking of buying, I could reference that document (and photos) and have comparable rental comps even after the comps were off the market and already rented.
Building a relationship with a wholesaler when you are not wanting to be a wholesaler is a good idea because they can start to look for deals that they know you are interested in buying. It helps them know how to negotiate deals and gives them confidence because they know you are ready to buy. They then do the leg work, get you a deal, and make some money. Its a win, win, win situation then.
@Ryan Detig Got it and got it, two very good tips for me! I'm gonna start making an excel spreadsheet now. Thanks!
@Aaron Ray you can only use FHA if you are going to owner occupy. I would consider a SFH in College Park and get some grad students in there with you for a year so you can get the hang of it. House hacking essentially gives you some room to learn (make mistakes) because you will have a relatively low interest rate and cash flow to cover. I would have a look at the Fannie Mae Homepath first look program. I have occasionally seen stuff in Hyattsville which I think has a lot of upside appreciation potential. Oh and don't worry about the girlfriend, she will come around
Set for life is an an excellent read!
I only make $80,000 combined family income, work 60 hours a week and have 85 and soon to be 109 front doors and $120,000 cash flow escalating rapidly to $160,000 by October. If I can do it anyone can!!
Brandon and Scott Trench just recorded a BP podcast with me this past week that will air Aug 3rd.
Anyone that wants more info on how ai did it can follow me and look at all my forum post, go to my profile and give me a call, or wait for my podcast to see how anyone can become financially free by living like no one else now, so you can live like no one else later.
I love this stuff!! If you change the way you look at things, the things you look at change right before your eyes!!
"Reality is merely an illusion although it is a very persistent one." Albert Einstein
I sure am glad I changed my paradigm and my reality 6 years ago and am now financially free!! Do you know how good that feels to go to work everyday and know if I lost my job, I could last forever on cash flow alone!! Your perspective of going to work and truly serving others because I love what I do as a parochial school teacher becomes that much more rewarding!!
Swanny