22 year old college grad, any advice on my first investment?

Question

22 years of age
$15,000 in student loans
no other debts
$50,000 salary, secure job
$4,000 in savings

here's what i'm thinking:
residential duplex/triplex/quad--i will also be living in one of them in order to save money for cushioning while being a landlord.
increasing the value of the home through a discount price, inflation. demand and forced appreciation. 
within a few years:
1031 tax exchange to pyramid up.

I understand that my plans are broad and the blueprint is yet to me entailed through this post but

my question is, is this a smart first real estate investment? is there other strategies or different routes that you would take if you were in my position?

your input may change my life and thank you,
denny p.

Account Closed · Answer

i love it...every day more and more young investors are coming on board...welcome!  great plans so far...however, i don't think you can 1031 a primary residence...a better strategy is to 1031 investment properties, and trade up on personal residences every 2 years tax free on your primary

also, if you're bringing in 4k/month with no or little debt, start saving!  4k won't get you too far in the landlording business...set aside a grand or more each month...you'll need these reserves for unforseen repairs, vacancies, etc.  ...also, banks will like to see you have moeny in the bank when they go to loan you money on the next property...good luck!

Danny Day · Answer

Hi Denny

Good 1st post. Welcome to BiggerPockets. This is by far the best resource you will find for these kind of questions. There are a lot of seasoned investors here who will be able to provide some insight onto what you're looking to do.

It sounds like you've got a good concept of what you want to do. Owner occupied is a great way to build equity and still get tax deductions. You can also fix one up while you're living there with some 'sweat equity'.

If you're going to be paying to live somewhere, you might as well get some equity out of it (or let other people pay!).

Just wondering what your plans were for the future 1031. Upgrading to a larger multi-family?

Again, Welcome to BiggerPockets!

Danny

Mark C · Answer

Keep building up the savings and be patient.  $4k can be spent in heartbeat in the real estate game!

Denny Pham · Answer

So I learned that landlording is an experience, holding for long term may be beneficial, self directed IRA's, 1031 may not work if i'm a resident there and 1031 an investment to a primary residence can save me being taxed (correct me if i'm wrong BryanA), and having a better exit plan when i'm scaling up my investment especially if i live there due to that vacancy of my unit.

--Things that I never thought of, read or expected (maybe not the LL thing)
--Thank you for the knowledge!

Denny P.

Gregory Childs · Answer

If you are planning to buy and hold your strategy is great. However, if you plan to buy, rehab, rent, and then flip it to an investor for a profit you may find that you being one of the renters is a disincentive - as when you sell it you will move out (to the next project) and they now have to find a new tenant (which impacts the cashflow).

If you intend to flip as your exit strategy you might want to have a plan in place to replace your position so that the cashflow is maintained.

TTFN,
Greg

Rob Gillespie · Answer

So much to say, so little time to type! LOL! I personally like single family homes. They are easier to get in and out of with a lot less management. With your new job, you dont want to get too distracted and look bad at work. I know in my experience of owning multi family, I was not much more than an adult daycare. My single homes, I can go YEARS and not even see them. I hope that helps.

P.S. I do like the 1031 plan. Also look into self directed IRA's for future wealth building in real estate.

Tylor K. · Answer

I graduated in 2009 and bought a duplex with an FHA loan in early 2010.  Being a LL is definitely a learning experience and not for the fiant of heart, but I would definitely recommend that approach.

Mark Updegraff · Answer

Denny, sounds like you've done some research.  I would only suggest a buy/hold given the current economic situation.  Long holds in RE seem like an excellent idea in my farm markets.

Denny Pham · Answer

everybody here seems to be geared towards helping, thank you Danny for the welcome and to answer your question:

yes, larger residential apartment complex, well hopefully.
commercial seems like big risk big reward from reading some posts.
what are you thoughts Danny?

22 year old college grad, any advice on my first investment?

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