Introduction - advice?

Question

I’m 28 years old, live with my parents in western Massachusetts (Berkshire County). I have next to no expenses- no car payment, no student loans, my parents buy groceries etc. I have a 9-5 job that I LOVE as a staff writer for a non-profit. I make about 43k a year. I’m just trying to learn about what assets to invest in. I’ve thought about low cost index funds, not sure if that’s the way to go.  I’ve stockpiled $27,000 over the past few years in a savings account hoping to buy a house with it. I qualify for FHA, have excellent credit. I’m hoping to buy a duplex to live in for a couple years, and rent out the other side. When I do find a decent duplex, should I put down the minimum in a down payment? If so, what do I do with the rest of my money? How do I make that money “work for me” as Kiyosaki would say (just finished reading Rich dad, poor dad and wondering what to read next)? I was thinking once I was in a duplex to use my leftover cash to put in a relatively inexpensive single family home that I can afford to pay for with a conventional loan and rent that out. Is that a good idea for starting out?

Dan Smith · Answer

Welcome to the forum @Marc Massery!  I love the Berkshires, my wife and I met at UMass and got married at Berkshire East :)  It sounds like you're thinking about things the right way, you've minimized your cost of living and you've been able to consistently save a nice little nest egg for yourself.  The first piece of advice that I would give you is to recognize your audience- I would imagine the overwhelming majority of people on this forum would push you toward buying property vs index funds due to the topic of BP.

That being said, I fall into that same category of people!  My wife and I started investing a few years ago with a 3-family, purchased with an FHA loan.  We had the benefit of having a larger sum of income than you, but depending on location in the Berkshires, that might not matter as much.

It sounds to me as if you're still very much in the learning phase, so I would recommend reading more books and doing more research on real estate investing to see if it makes sense for you.  This type of investing isn't as hand's-off as index funds, but I think it's much more interesting.  Check out posts here on BP, read blogs dedicated to real estate, maybe attend a real estate agent training course, (only a few hundred dollars in MA), and see if you get excited about buying, fixing, and renting property.  It's definitely not for everyone.  I lurked and educated myself on real estate for 3 years before I had the comfort to go and buy our first property.

As far as next books that I would recommend reading:

Set for Life by Scott Trench - He's a millennial, like us, his book is a good foundation builder for the thought processes that go into seeking financial freedom.

Long-Distance Real Estate Investing by David Greene - I recommend this one because I'm not sure that the Berkshire area is the best to invest in, with regards to multi-families and this book helped me to feel more comfortable with buying out of state, though this approach definitely isn't for everyone.

I also recommend any of the BP published books as they tend to be some of the better written real estate books I've seen lately. BP Bookstore Found HERE

Good luck on your journey and I hope we see exciting things from you in the near future!

Jonathan Soto · Answer

You have the right mindset, it is time to take action. You have the cash to buy a duplex or even go up to a triplex if you can afford in your area. continue to save and once you rent out the multifamily you will live rent free. try to take the smallest unit or rent out bedroom to your buddies to increase in cash flow. Once you are settled in continue to save for your next property. Try to find one where you can add value, such as a fixer upper. Go to meetups in your area and network. Network is huge in this business. Find a good agent who is an investor in your area. They are a lot of books out there, listen to the podcasts and read the ones they are recommending. Read Richest man in Babylon.

Best of Luck.