What's your best advice for a 29 year old looking to get started?

Question

In the grand scheme of things, I know 29 is young. However, financially, I feel like I'm way behind. The thought of turning 30 next year has me really focused on what's next for me and my future family. I've been listening to the podcasts, reading Rich Dad Poor Dad and other various real estate books, and I have found fresh determination to get in control of my life instead of letting life control me.

However, I want to throw out there that I'm a typical middle class millennial who fell in the "go to college and get degrees that won't make you a lot of money" trap. Before I started looking into real estate, I was proud of the fact that, by the end of this year, I will have a doctorate in education. However, now that I've been educating myself financially (for the first time), I'm completely bummed at my choices! But, I guess that's the consequence of growing up in a typical "poor dad" scenario.

What's your best financial advice for me moving forward? Should I focus on paying down my student loan debt, get into real estate as a means to help get the debt paid off at some point, something else? I just want to get a handle on it all and truly want what's best for my future. Sitting back and simply paying bills the rest of my life is terrifying and with the student loan burden, I don't know if any time is a truly "good" time to get started.

Nicole Heasley Beitenman · Answer

@Carrie Link I'm in the same boat as you. BP is a great place to go if you want to feel old thanks to these 21-year-old investors who found a way to become financially independent through RE by buying their first house shortly after completing potty training.

I also graduated with heaping debt thanks to a lot of terrible advice from, well, everyone. I graduated with an accounting degree and could not comfortably live alone while keeping up with my payments. I looked to real estate to solve that problem. I got into a SFH with an FHA loan and house hacked for 3 years. I lived with total strangers that I mostly met through CL and roomiematch.com as a young female in a urban-ish area. Thanks to house hacking, I was able to make my monthly payments and continue investing in RE. It really frustrates me when I see people asking, "Should I pay down debt or invest in RE?" The answer is always "both."

Anthony W. · Answer

@Carrie Link welcome to the realm outside the matrix lol. Just kidding but really RE is something that is a long term play. Based on what you described i would start out with a house hacking situation. Not sure if you know but house hacking is where you have a home and you rent out a room essentially someone else is paying your mortgage/rent........or you could rent a room but we are trying to get you wealthy here. I understand student loans can be very distressing but dont get bummed out. Another method that you can use is the BRRRR method where you purchase a fixer upper and refinance to use the money again (short explanation). Hopefully this short answer helped you. Lets bounce ideas back and forth to help you. Look forward to chatting with you.

Dana Gaglione · Answer

@Carrie Link You should know you aren't the only one who thinks this way! I am in a similar boat; graduated with a Masters with a salary that is not great. I'm currently looking into house hacking even though my area is expensive. Decent houses starts at $250,000 with $9-12,000 taxes!

Keep at it, you can do it!

Michael Doherty · Answer

@Carrie Link depending on what your family situation is like, you should seriously consider house hacking. If you can find a 2-4 family where you are comfortable living, you can use a low down payment to purchase the property. This will not only be an investment for you for years to come, but also be your primary residence. Depending on your market, you could 'live for free' ie... have your tenants pay your mortgage, taxes insurance or at the very least,only have to come out of pocket a few hundred dollars. This will really escalate your savings (not having to pay rent) and you can use your salary, which I am sure is decent for someone with a doctorate in education to pay off your loans and get your DTI down significantly.

Also if you live there for 2 of the last 5 years I believe you would not have to pay taxes if you decide to sell down the road.

Anthony W. · Answer

@Carrie Link BRRRRs (Buy, Rehab, Rent, Refinance, Repeat) usually depend on the funds you have to make the property ready. Experts can have a property ready within as little as 6 weeks to 2 months where on average as I have heard it takes newbies 6 months to a year. Now once you get to the refinancing side you need to get with your bank and see how long their "seasoning period" would be on a property. The purpose of a BRRRR is to use the same money you put in over and over to acquire properties. For example, you buy a property for 70k cash and put 30k work into it now you are 100k into the deal. Once you have project complete you have an appraiser come in and hopefully it appraises for around 160k or above but lets say 160k. Take this and head to the bank to get you money back (refinance) HOPEFULLY you choose the correct bank and they give you 70% (or more lol) of what you put in the deal. To keep with the example lets go with 70% of 160K= 112K. So, you just made 112K, you pay off any people that had money in the deal and you roll the rest into the new property. At the end you have a fixed up property that is sending you rent money now, you have your money back to do another deal, and last but not least, you have experience so someone else will want to work with you. Hope that helps just a bit.

Erik W. · Answer

@Carrie Link, hi there.  Welcome.

First, 29 isn't too young, and you're not behind anything.  Colonel Sanders didn't fry his first piece of chicken until age 69, so there's that to consider.  I got started in 2005, when I was 29.  We're about even!

Also, "Rich Dad Poor Dad" is mostly fluff/motivational material.  I'm not saying it's bad, but it's "big picture, verbose, and very light on details."  I'll save you the time reading any more of Kyosaki's material:

1) Don't work for money, make money work for you.

2) Don't buy liabilities, buy assets.

3) Buy assets with others people's money.

4) Don't work a job, own a business.

That sums of 90% of his collection of books.  You're welcome for time and money saved.  ;-)

Now what should you do to get started?

Step 1 that almost every newbie (me included) doesn't do: Find you WHY?  "Get rich" isn't enough.  There has to be a reason WHY you want to get rich.  Getting a lot of money and a high net worth is meaningless unless there's a very powerful reason behind it; otherwise, you might as well just play video games and keep trying to beat the high score.  That's all money/wealth is: a score card.  It's what you do with money/wealth that makes a difference.

Step 2: define your areas of interest and skill.  Do you want to be a land lord (buy and hold, the "long" approach) or a flipper/wholesaler (buy, sell, buy, sell, buy sell...the "short" approach)?  Once you figure out if you're in for the long or short game, see which strategy works best.

Step 3: write down your goals for the next 6 months, 12 months, 2 years, and 5 years.  Then decide which strategies you want to follow to achieve them.

Some "short" people wholesale (get under contract, sell contract to investor before closing).  Some flip houses (buy, close, repair to excellent condition, sell to owner-occupied).  Some flip notes (i.e. paper...loans).  Some "wholetale" (get under contract, close the purchase, then flip with little or no work).  I did a few of those.  Fun, made a few bucks, but not my cup of tea.  I'm a "long" person...buy and hold LL.

Some "long" people land lord residential.  Some land lord commercial.  Some buy notes and hold them for income.  Some do self-storage (a derivative of commercial).

So many ways to make money!  Don't run in every direction at once.  I advise you to choose 3 strategies based on your goals and learn them inside and out.  Then pick ONE to start off with and think like an intern getting some job experience.  If there are any other local real estate investors, offer to do some grunt work for them for free in exchange for learning about the process of the strategy you want to emulate.  If you want to be a land lord, for example, offer to inspect the inside of occupied properties for a land lord.  If you want to be a distressed note investor, offer to go take pictures of property with delinquent notes and research titles at the courthouse.  Your "pay" will be knowledge and experience.

Last thought, prepare to make mistakes.... it's going to happen.  That's okay, you can forgive yourself, but try to keep the mistakes as inexpensive as possible.  Mistakes on a $50K house are a lot easier to handle than mistakes on a $500K house.  Banks aren't as forgiving.  (*wink)

Good luck!

Spencer Cornelia · Answer

@Carrie Link Spend every possible 'free' minute listening to real estate podcasts, reading forums on BP, watching YouTube videos on real estate investing, networking with people in your area, etc.

The answers you seek will arrive in your lap from various sources throughout your journey.

Carrie Link · Answer

@Martin Tyler @Anthony Ward how long would you guys say a typical BRRRR deal takes from start to finish? More specifically, how quickly can you turn around with the financing aspect of a BRRRR?

Carrie Link · Answer

@Martin Tyler yeah I think it's time. We could definitely live in a house while we fix it, it's just finding locations in small towns that is hard to do. The ones in the good locations are too expensive to consider "fixers" because, at the end of the day, people are only going to pay so much before they just build their own, if that makes sense. And the houses that are at a good price points tend to be in crappy locations where houses just sit.

What's your best advice for a 29 year old looking to get started?

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