Investor · Sarasota, FL · Member since 2018 · 8 posts · 3 votes
I am 20 years old and I recently became a licensed real estate agent. I work part time as a roofer and I will continue until I have a solid client base. My goal is to buy a multifamily and live in one unit while I rent out the rest. Should I continue living at home for free or try to find a property and move out?
I would ask - do you consider yourself "Financially Stable" - whatever that means to you? Are you making enough money to pay ALL YOUR BILLS: Rent, Automobile, Groceries, Insurance, other items necessary to establish yourself as an Independent person? Could you survive for for a period of time if you were unable to work everyday?
If you can honestly answer YES to most of these questions, and you feel you have the emotionally stability to continue making progress - then GO for it!
Becoming a Real Estate Agent can be very lucrative or it can be a large money sucking hole. Depending upon the RE Market in your area it can take some time to collect your first commissions, and establishing a successful and profitable RE Practice can take several years for most Agents. Don't spend the commissions before you get them or immediately thereafter. As a Commission only Sales Agent, you'll need to budget for your MLS Expenses, and other REALTOR Expenses, as well as Income Taxes and Self Employment Taxes. Self Employment Taxes will consume 15% of your commissions. Income Taxes will take another 15% - 25% dependent upon your Tax Bracket. This is before you've invested any money in your marketing for clients.
Two other major pieces of advice as a new real Estate Agent:
1. Invest in your most important Asset - YOU! Meaning don't hesitate to spend money WISELY on education and training. It was always amazed at some agents that would spend $2,000 for a "jazzed Up" computer, but would not spend $500 to attend an out-of-town training session that could produce many thousands of dollars in return.
2. Grasp the concept as a Self Employed Real Estate Agent - your success is UP TO YOU! You company and Broker can assist, but it's up to you to make it Happen!
As I was starting out and considering whether to join a large Company or a Smaller Company, an Experienced Agent said to me - "Jim, it doesn't matter whether you choose a small company or a large company - it's really all up to you"!
I would ask - do you consider yourself "Financially Stable" - whatever that means to you? Are you making enough money to pay ALL YOUR BILLS: Rent, Automobile, Groceries, Insurance, other items necessary to establish yourself as an Independent person? Could you survive for for a period of time if you were unable to work everyday?
If you can honestly answer YES to most of these questions, and you feel you have the emotionally stability to continue making progress - then GO for it!
Becoming a Real Estate Agent can be very lucrative or it can be a large money sucking hole. Depending upon the RE Market in your area it can take some time to collect your first commissions, and establishing a successful and profitable RE Practice can take several years for most Agents. Don't spend the commissions before you get them or immediately thereafter. As a Commission only Sales Agent, you'll need to budget for your MLS Expenses, and other REALTOR Expenses, as well as Income Taxes and Self Employment Taxes. Self Employment Taxes will consume 15% of your commissions. Income Taxes will take another 15% - 25% dependent upon your Tax Bracket. This is before you've invested any money in your marketing for clients.
Two other major pieces of advice as a new real Estate Agent:
1. Invest in your most important Asset - YOU! Meaning don't hesitate to spend money WISELY on education and training. It was always amazed at some agents that would spend $2,000 for a "jazzed Up" computer, but would not spend $500 to attend an out-of-town training session that could produce many thousands of dollars in return.
2. Grasp the concept as a Self Employed Real Estate Agent - your success is UP TO YOU! You company and Broker can assist, but it's up to you to make it Happen!
As I was starting out and considering whether to join a large Company or a Smaller Company, an Experienced Agent said to me - "Jim, it doesn't matter whether you choose a small company or a large company - it's really all up to you"!
@Jason Stoltzfus I recommend that you rent your own place. Not for financial reasons, just because there is a dignity from being your own man. Also, you will achieve a new level a maturity that you cannot get from being dependent on your parents. For financial reasons, I don't recommend that you buy a house to live in. You should use that money and your DTI to purchase cash flowing real estate.
@Jason Stoltzfus I cannot recommend house hacking enough for your situation! You will still be living for free, but your tenants will be paying off your asset for you. If you buy a listed property put your commission toward the purchase instead of spending it. Also, if possible, pay all of your other living expenses with just your roofing money.
Then take the money you would have been paying for rent and spend that on marketing to find an off-market property for your second investment.
Meanwhile, work your SOI. Most new agents can pull a few buyers and maybe a listing from among their family/friends/associates because they want to help you out with your new endeavor.
Boom! Inside of 6 months you have 2 investment properties, you've gained experience buying both on and off the MLS, and you've possibly banked enough commission for the down payment on your 3rd property.
Keep it up, Jason!
I couldn’t agree more with Jim regarding the real estate profession. Though it was a different situation, I had zero living expenses when I started my career and it allowed me to really go at it hard and take some risks. I’d recommend considering doing the same.
If your goal is to build a career in real estate sales, you’ll need to get out of your parents home eventually - because your youth is not going to be an asset as you’re interacting with clients - and it won’t help if you’re still living at home :-). The more credibility you can build, the better. So, if and when you’re in a position to house hack, do it! Make sure you’re ready for the down months as far as expenses go. If you can swing it in the up months and the down months, then you’re golden.
Good luck!
@Jason Stoltzfus. What area of Real Estate is your focus? Is your focus more on Residential or Investor related activities? If you plan to focus on residential, I'll be happy to chime in with same training avenues to pursue.
Jason,
Stay home as long as you possibly can. It is interesting how folks feel like you have to put on a facade of success in order to generate business. I would live at home and save up money AS LONG as you can. It is essentially the GREATEST house hack of all times. Let’s see free rent, no risk, can build your business freely. Sounds like a deal!
I would not let the no asset, “middle class” agenda rule your life. There are so many immigrants that come to this country and kill it because they work their butts off and don’t have to keep up with an image. Your clients and potential clients probably don’t care if you live at home.
I would say if you are not investing in your new career or get married it’s time to move. That is my 2 cents.
I don’t disagree with the (very emphatic) live at home sentiment at all- and don’t misunderstand my comment to say you need to purchase a home for some perceived status. what I should have clarified is that there is no substitute for experience! I became a much better agent after I purchased my first home/property because I knew what it was like to walk in my client’s shoes.
Also- if you’re in a position to find a great deal on a house hack, you’ll build wealth a lot quicker than you would living in in your parent’s house without buying a property! And typically a house hack requires a lot less down than a traditional investment.
This might be a question to ask your parents first...
If they're okay with you staying at home then you really should! Give your parents 5-10% of your cheque... trust me you're still better than rent at that point... put the rest into blue chip investments that make a better ROI than current interest rates.
2 years down the road.. have the discussion again with your folks... stay at home or on your own... at 22 if they're still not sick of you.. than put all that cash you've saved up into a multi... but here's the kicker... still STAY AT HOME! If you purchase a duplex or quad plex and rent out all 4 units... stay at home and work your two jobs you'll be doing GREAT!!
By 25 you can get your first SFH, house hack it... hell rent out one room.. (get a decent starter near a college or university) Once you have over 50% of the house paid off in mortgage and you've done some decent renos.... refinance that and pick up another... rinse and repeat until life circumstances tell you otherwise... at 35 I started my family.. that was my last reno... and picked up a turn key unit for my family and now purchase fixers and rental units. You follow that formula you may be retired before 40!
@Jason Stoltzfus, normally I'd go for the "stay at home as long as practicable" strategy. The main reason I'm not suggesting that to you is along the lines of what @Stu Wann posted: ..."typically a house hack requires a lot less down than a traditional investment"!
And further to that, owner-occupier loans are generally easier to get, and have longer terms, and lower (fixed) interest rates! Hopefully, you have time on your side to find the right bargain.
So, I recommend the "house-hacking" strategy. Buy a (bargain) fourplex; live in one! My 2c...
Live at home for as long as you can & bank your cash... you will never have the opportunity again. once life happens (and it will).... you'll be in a different financial space.....
Pay off all your debts (everything thing) no car payment (sell it if you have one & buy a reliable one for cash), pay off your cc, when you need money for your income property you'll be in a great spot to maximize things...
I would live at home as long as you can. I mean no offense to anyone in this thread but a lot of the folks telling you to move out are older guys. I lived at home after a messy break up for 6 months to save some more money for a down payment. I paid my parents rent (800) a month and on closing day they gave it back to me to use for the house. That was an incredible gift that they gave me. I saved a lot of money living at home. Stay as long as you can is my advice.