What’s the best next step for a young investor?

Question

I’m 22 years old, I’ve been working as an electrician for the past 4 years. I’ve been managing my own 3 family rental property for the last 2 years. I’m sick of working my day job and I’m dead set on working for myself in real estate in the future. The equity in my house is about 10% without accounting for appreciation, I have $25k saved up and ready to invest, and I live at home with my parents. So I can afford to take a lot of risks based on my current position. I’d be willing to quit right now and work 80 hours a week for myself building a future business than to waste my time making peanuts while my bosses gets all the money. The problem is out of all my friends, family and coworkers I don’t know anyone who’s particularly entrepreneurially minded. My circles are small, I’m not on social media, and I’m not particularly sociable as a person so finding helpful connections is difficult.

I suppose my question here is what can I do to make the jump into financial independence? What skills should I be learning? I’m willing to make a career shift as I don’t have much interest in being a contractor, some DIY skills are nice but I don’t see a great future in this industry and I’m not sure what I would excel at. Are there any investments I can be making now with the funds I have? Knowing the right people I feel would be beneficial to me here. But going up to an experienced investor (if I knew one)and asking to be mentored seems ham handed at best. So what can I do to make myself marketable to an entrepreneur so that we can both benefit?

I’ve been looking into another rental but the 20% down is high(property values are high where I am) and it’s a long term investment. I’m interested in flipping houses and I’m willing to jump in head first but I don’t know where to start. All in all I’m feeling lost and very unhappy where I’m at now and I’m wondering if any of you can see something that I’m missing.

Matt Hershberger · Answer

@Ryan Tessier I really enjoyed reading your post. It sounds like you have the right mindset and I wish you the best of luck! Surrounding yourself with like minded people I think is key. My best friend is the one who introduced me to real estate back when I was 19 and I give him full credit to the position I am in now. It is a long journey but I would not trade it for anything. When I came out of college my biggest fear was to work a 9-5 job sitting at a desk all day. I could not be more thankful for the things I have learned from not following this stereotypical way to live life after college. Obviously it has come with a lot of hardships and doubt but I love what I do now. Not to say that doing the 9-5 is the wrong thing to do. Grinding it out and "paying your dues" to build up enough capital and to take a step back to learn everything before going all in is actually very smart. Go to meetups, find the people that know the business, ask questions, ask to shadow others. Real Estate is all about who you network with. Talk to contractors, lenders, agents, and everyone else that has any part in  real estate in one shape or form. 22 is so young and the journey for you has just begun. Best of luck!

Ned Carey · Answer

@Ryan Tessier there is a lot to learn in this business. Sometimes you need to learn a lot, just to know which direction is best. Real estate is not get rich quick. So be patient keep reading and learning here and in your market and it will gradually become more clear.

No for a more direct answer to your question. Next step: go to real estate meetups. It will help you with your networking skills and put you around entrepreneurial like minded people.

Jason Fitzwater · Answer

Hey @Ryan Tessier I'm new to real estate investing also, so I can definitely understand your perspective... it all seems like an up hill battle at first.  As others have start networking as much as possible and making connections especially at local events.

Also, check out the some real estate investing books like How to Invest in Real Estate by Brandon Turner and Josh Dorkin or BRRRR by David Greene.  Both of these are extremely helpful in getting you acclimated to REI.

Good luck!

Tom S. · Answer

@Ryan Tessier  Certainly enjoyed reading your post as well.  One thing to keep in mind when crunching numbers: 9-5 job vs working on your own.  9-5 at least provides (hopefully): health insurance, vacation days, sick days, paid training, 401k / 401k match, to name a few.  It's also far easier to get loans if you have stable income.

As others mentioned, go to REI meetups in your area to get more educated and network.  If you're living at home, moving into a place with a 3.5% down owner occupied loan is a good starting point, and rent out rooms or units.  Then after a year or two, move into another place, keep the original, and slowly repeat.  Over time, you can build a great portfolio of properties.

Good luck!

- Tom

West Wiggins · Answer

@Ryan Tessier

Since you are new, the best thing to prepare is reading up on the market you're in. Other than that listening and asking the right questions is the best advice that I could give. All of the meetups that I have been to have been very beneficial, and the people you will meet are always willing to help new investors. You are already taking the right steps, best of luck!

West Wiggins

Ryan Tessier · Answer

I appreciate all the advice, there’s two real estate investor meetings coming up in my area and I’m going to try to make both of them. Is there anything I should know, or do in preparation? What should my goal be at this meeting?

Neil Pradhanang · Answer

@Ryan Tessier hey Ryan, I actually envy you being so young and having this kind of mindset. It seems like you have an eager to learn real estate investing and willing to go full throttle in it. I would start by attending local real estate investor meetups, gaining more knowledge and networking like crazy. The more people you know in this space, the better.

Rich Kniss · Answer

@Ryan Tessier, no reason to feel lost. There is a lot to know, but you don't have to learn it all at once. I'd start by going to some meetups and educating yourself with podcasts and audio books. You may find a partner at one of the meetups, or at least some entrepreneurial people you are seeking.

If you truly want to switch careers, figure out how much cash flow pre month you need for your income. Then divide that by how many houses or doors it will take. Then create a plan that gets you there over several years. Read the One Thing by Gary Keller.

Good Luck.

Rich

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