Real estate investing without a steady job?

Question

Hello bigger pockets forum readers! First off I want to thank anyone who is taking the time to read this and want to extend gratitude to those who decide to chime in.

I am a 27 year old college graduate of environmental studies who has been traveling and working all over the US since 2014. Since achieving my degree, I have followed my passions and never really stopped to think about how I will one day overcome being poor until this spring. In May while listening to "this american life" an add came on for the bigger pockets podcast and I have been listening to about 5 episodes per week and supplementing by reading real estate and business books. I am hooked. I am constantly running numbers on my free time and calculating deals in different cities that I am interested in investing in. I have been learning so much, so fast, that I forget sometimes to slow down and remember who I am in the scheme of our current neo-liberal economic landscape. It just seems like most people interviewed on the podcast that got their start with no experience and little to no money down, at least were more integrated in societal norms. Such as having steady jobs with decent pay.

I have never worked a job for more than 6 months due to the nature of my life style which boils down to working field based biological research jobs spring-fall, and substitute teaching in public schools in the winter. Included in this lifestyle I usually live out of my van for many months of the year and am able to save a good chunk of my income. (current savings= $12,000). I've never even been on an official rental lease in my life...

But I am ready for a change because this lifestyle cannot sustain itself forever. Which is why I have come to you all! I am interested if anyone out there has advice for me. Two years ago, I failed for a car loan (given it was from my local credit union) because of my irregularity in pay checks and job stability. Which has me thinking that most people who I will ask to loan me money might just laugh in my face.

My goal is to live in a house hacking situation, and do 3 flips or wholesales by 2021. As of now I'm setting my goal small as I figure I will need to add in time of maintaining a steady job to acquire loans. I am currently debt free and my credit score is at 750. I also have access to about 50k that I received from my father passing away in 2012.

My questions are-

Before I go and make a fool of myself by asking lenders for money, do people out there think that someone like me could obtain loans?

Do people buy wholesale deals from newbies who have never tackled deals before even if they run the numbers and have a solid lead?

Can you just off the couch become a real estate investor as they inspire us to do in the podcast as long as you put in the time to educate yourself?

Do interest rates differ in correlation to income from hard money lenders or even bank lenders?

Is there any general advice anyone is willing to give for someone in my situation? I am ready to get started, at least mentally. And, although I don't feel comfortable jumping in without many more months of education, I want to continue getting serious about this in anyway I can.

Thank you so much for your time.

Sincerely,

Nik

Steve K. · Answer

@Nicholas Kronick I lived in vehicles and worked sporadic odd jobs around the world “living the dream” being a climbing bum for much of my twenties. One thing that helped me when I got started in REI was being used to living like a monk and saving shrewdly, like it seems you are capable of. When I did finally raise some capital, I put it in high dividend yield stocks so that even though my employment history left a lot to be desired from a lender’s perspective, I had consistent dividend income which is equivalent to ordinary income, plus enough saved up for a decent down payment and cash reserves after purchase which helps tremendously. Seeing as you have a good credit score and capital to work with, I’d say you’re doing better than most at your age. Getting started with a house hack is a great idea (that’s what I did). Pick a desirable area where you expect high appreciation (I chose Boulder and it has treated me well). Also don’t be scared to talk to lenders, they don’t bite in my experience. That’s the starting point unless you’re planning to pay cash. All the lenders I know are great people who would be happy to help someone like yourself. I can’t see any of them laughing in your face and even if they do, who cares, find another one who will take the time to let you know your buying power as-is plus give you ideas of ways to improve your financials in order to qualify for a larger loan. Partnering could be another strategy for you to look into, or using a co-signer. Good luck!

JM Payne · Answer

Sorry to hear about your dad, but the rest of your story was enjoyable.

As to whether or not you could get a loan, do you have any steady job now that you're "ready to make a change?"  Your best bet is with a portfolio lender, as their lending requirements are more lenient, preferably someone you know or have a relationship with long term.

Yes, people buy wholesale deals but, as a newbie, you are likely not capable of finding and negotiating a deal that would be sellable.  Nothing personal, it just takes experience and knowledge about a lot of different cogs to make the puzzle work and sell a wholesale deal.  You're better off bird-dogging and/or interning.  If you DON'T have a steady job, this might be a good place to look.

Yes, you can get off the couch (or out of your van) and be successful.

Yes, rates differ between institutional lenders, private money and hard money.

Regarding advice, get a job, network with bankers and get pre-qualified.  If you have $12k saved up, you're already on a roll.  In some markets, you can buy a house for $12k, so maybe drive to one of those markets before you find a job.  I didn't include the $50k in your numbers because I am a firm believer of the Millionaire Next Door philosophy which, if you are familiar, basically states that that is money for which you did not work and therefor are statistically likely to lose.

Also, you can live your lifestyle forever...we're currently living in a 35' bus and flipping houses full time.  Happy to connect and talk further, I hope that helps.

- JM

Jermell Shavers · Answer

@Nicholas Kronick 62k is a good start in paying cash look for a C class neighborhood

Jermell Shavers · Answer

@Nicholas Kronick. If you’re paying cash and travel and live out of your van for most of the year buy a house in cash and rehab it but look for the best deal an depending on your market invest out of state that way you have no mortgage and cash flow and you’re set. You stay debt free and get cash and own a property.