New College Graduate in Southern California - How to Start?

Question

Hi there,Around March of this year, I started thinking about investing and pursuing, and luckily ran into BiggerPockets. Since then I've learned from the wealth of knowledge here in the podcasts and on the forums. Thank you all for being part of such a helpful community!I'd like to get started gaining experience as quickly as possible. Fortunately I'm employed at a well-paying (90k salary) job, so I'm currently learning how to optimize my spending and saving habits to set me up for success. The problem is I'm not sure how to start building experience. House hacking is very attractive to me, but this may be difficult given the market and the fact that my job is in downtown LA. I'm weary of the "invest for appreciation" mindset that seems prevalent in this market; this smells like speculation to me. Nothing wrong with that, but I would prefer to buy deals that make sense now! Flipping is also interesting, but I have no idea how I can compete against all of the veterans in the area. My goal is to get started ASAP, because I'm a big believer in learning through experience and making mistakes. That being said, I obviously don't want to ruin myself financially in the name of "getting started". I hear that this market is very difficult, and this is discouraging me somewhat.What advice would you give to someone like me? Should I continue to keep my head down and build up my savings? Or should I jump into something and start learning by doing? Is getting my real estate license worth it? The MLS is certainly useful, but I've been told that it's easy to get access through licensed friends and that the best deals don't come from there.Thank you!

Arlen Chou · Answer

@Eli Sorey congrats on finding BP and also a have a good job. You are already doing some of the right things at the start of you journey. Get use to saving money, don't "live up" to your salary, "live down" to what you need and save the rest. The reality of the world is that you need to build a "war chest" and gain some skills. The way I, and many successful people did this was by "house hacking". Get a place to live in and get roommates. This is totally not sexy or glamorous, but it is 100% tried and true. Your roommates will be building equity in your property every month, and they won't even think twice about making you richer! You will also learn the basic skills of property and tenant management. If you bought well, you will be able to cash out refi at a later point or sell the property and pocket any appreciation tax free. You should then have a good size pile of cash to start looking at other strategies or just continue expanding this one.This strategy has worked for decades in markets all across the US. There is no need to re-invent the wheel or to make life more complicated when you are just starting out. Get creative after you have some cash on your side and experience under your belt. It worked for me...This is just my opinion... your mileage my vary ;-)

Kristina Heimstaedt · Answer

When you're starting out, I think it's important to learn about leverage. There's nothing scarier than to think that your spending your last red cent on a property in the hopes that there are no costly hiccups along the way. I'd also take the time to really study whose investing habits you are most interested in aligning yourself. By doing that, I think it helps you get past the analysis paralysis and waiting for someone else to tell you that it's ok to invest in a particular property. The last is to really understand what you want your life to look like and why you're interested in investing. I think most of us here are seeking some amount of control over our financial destinies, but many people have slightly different lifestyles that they want to achieve through their real estate investments. Lastly, start analyzing deals and see if you can't find a mentor/work with someone to collaborate with on your results. We analyze deals one way, but I know developers as well as other buy and hold investors who don't assess an opportunity the way we would. Also by talking to different types of investors, it can really help you to become wise very quickly and learn what does or does not work for you and why. It might be because of your lifestyle you're trying to achieve. It might be the different people it allows you to work with. You're young and in California. Save your money. Educate yourself further and really consider your why.

Thomas S. · Answer

Assuming that your ultimate goal is in real estate investing, being young with your life ahead, the best advice I could give someone in your shoes is to research the investment and employment opportunities country wide nd make it your goal to find employment elsewhere. Now is the time for you to set your priorities in life.

Elisa Uribe · Answer

Hi Eli! Congrats in advance, once you go down the road of building wealth through Real Estate, you get hooked! It sounds like your mind is already spinning with options and ideas and that's all good! What might help is to try to narrow down what kind of investor do you want to be. Buy and Hold? Flipper? House Hacking sounds like it peaked your interest most so maybe focus on the HH forums, and contact people directly so you can have better conversations about their experiences both good and bad. You can then ask more pointed questions.I would also talk to a lender so you can start to learn your numbers on what you qualify for based on your income, savings, and credit score etc. That will help you establish timeline. Get your team in place now so when the opportunity is there, you know who to call. Keep learning about what it takes to buy in the city you are interested in. For instance in Oakland, Alameda, Berkeley, and a few other Northern CA cities, there is a sewer lateral ordinance, that although negotiable, but in this market, most buyers take on the responsibility of replacing the sewer line within months of the closing. On the last house I bought, that was an extra $10,000. For some investors, that would kill the deal. Best of luck!