Is it ever too early to start?

Question

Hello everyone,

My name is Tyler Warlow. I am 19 years old and currently pursuing a dual degree in Engineering. For the past few months, I have been working in an experience called a Co-op. Through this, I have met a mentor who has suggested I look into real estate. I have been listening to the Bigger Pockets podcast recently and through this, I learned about house hacking. My unique situation in college results in the need to rent an apartment for the next few years. I have been considering trying to buy a property and renting out the other space thanks to Bigger Pockets. I have a potential partner in my mentor if I can find a deal. I have enough money to make a down payment using a First Time Homeowner's Loan but after that most of the costs would need to be covered by my partner.

Is this a viable option for someone my age given the risk involved?

Should I be more tolerant of risk because of my age?

Any thoughts and opinions are appreciated as well as any resources that may be beneficial for a college student looking into real estate. Thank you all.

Nathan Gesner · Answer

It's not too early. Yes, you can take more risk because you have the rest of your life to recover but that doesn't mean you should throw caution to the wind and make stupid choices.

I think you have a great opportunity and you sound mature enough to handle it. Start talking to a lender about options for financing. Figure out how to find the deals (agent, direct mail marketing, newspaper, Craigslist, telling everyone you meet about what you are looking for, etc.)

Question: if you can afford the down-payment, what costs would need to be covered by a partner? I think you'd be better off finding a deal you can fund yourself and that supports itself.

Brian Ellis · Answer

Looking back, at 19 I had the same knowledge about real estate as I did at 27. The only differences from then and 27 were:

I partied at 19, I didn't party at 27

I didn't make my bed at 19, I made my bed at 27

I didn't pay my bills at 19, I paid them at 27

I didn't budget at 19, I budgeted at 27

I would give up at 19, I would persevere and work hard at 27

Just by your post it seems like you are responsible, you have already taken a series of steps to put yourself in a good position (while pursuing a great career). Not to mention, If you are going to stumble, it is better to stumble at 19 then it is later on in life. No human is capable of making great decisions consistently, just make sure your ducks are in a row, and you do your best to stay on top of things!

Michael Quarles · Answer

Good to meet you.

I began at 19 and after 1000 deals I am still here killing houses...

The only part of your plan is the traditional financing... I am not certain youll need it... I have yet to buy a house with traditional financing. And in your play converting a absentee into a seller financed deal of option deal is fairly easy.

BTW this is me in my Bentley in front of the first deal i did... Set high goals and achieve.

James Galla · Answer

We can't be sure what your financial position is, but it appears you have limited funds saved. From that, it is important to understand that banks look to income capacity more than how much you have in your accounts. Hence, many people correctly point out that you need a solid W-2 to get financing for real estate deals. This can be overcome by having a partner with either cash or credit.

Presumably, you'd be living in one of the units of the 4-plex. Since you are on the engineering route, perhaps you should also look into basic construction - drywall, flooring, fixtures, etc. The fact that your partner is willing to teach you is great, however, because that takes your partner's time away, your equity share in the property may decrease - after all, a partner should not give you a larger share if he or she has to do everything himself/herself.

As to finding deals, you should take advantage of the college market - so, you are the person that needs to go around and locate the profitable deals. Other than that, you can look at the traditional methods. If you are working with someone who does all cash, you can look to foreclosures.

Thomas S. · Answer

There are no guarantees when investing. If your investment goes south, your mentor walks away leaving you holding the bag, will that effect your ability to continue your education.

Think worse case scenario and base you immediate decisions on that. At 19 you have all the time in the world to do what ever you please. Maybe investing now is not that important, maybe it is, but you need to think hard before you take the risk.

Our advice is somewhat biast since for the most part we are successful investors, as is likely your mentor. You would get different advice from the 95% of those starting or wanting to start investing that are never successful....keep that in mind as well.

Frank Wong · Answer

Hi Tyler,

I think if you find the right deal and your mentor will cover the costs after the down payment I say go for it.  The two key parts are finding the right deal where the number make sense and second that you have a partner to help with costs. The biggest mistake with new investors is underestimating their reserves.  They jump into a deal and 1yr down the road they realize they need money for XYZ.  Love the idea of finding a place to rent while in college and renting the rest to your friends or other students.

Good Luck

Tyler Warlow · Answer

@James Galla

Thank you for your insight. I had not thought about those things.

Jim K. · Answer

@Sergio Aguinaga

Sure. But you're minimizing your chances, relying less on experience and more on luck. The more experience you have with women (or men, it doesn't really matter, bad relationship partners come in all genders), the less likely you are to make a mistake in the single more important factor, your marriage, that decides if you go through life rich or poor.

95% of US millionaire households are headed up by a married couple or a widow/widower. 5% are headed up by someone who is single or who chose not to remarry after divorce. Furthermore, 98% of married AND divorced millionaires will admit on a survey that their current or former spouse "contributed significantly" to their being in their current financial position. I didn't pull these numbers out of thin air: this information is in the books that Thomas Stanley wrote, starting with Marketing to the Affluent and ending with Stop Acting Rich.

Sure, control your expenses, sure, increase your income, sure, limit your spending rate, but if you really want to make money in America, a lot of data says that it's a team sport, and you'd better pick the right spouse for it.

IMO, when it comes to men like me talking about doing this, the women in their lives who make it possible simply don't get enough credit, with the data being this obvious. I've been looking at this for a while now. My situation is very clear because I'm in business with my wife and I know I could have done what we've done to date without her. But she's never written a line on this website, so it all sounds like me, me, me. It's not.

Is it ever too early to start?

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