College graduate new to the Game

[Brandon Earman]

Hello BP.

Recently graduating college and entering the workforce, I have zero debt (other than a truck payment). I'm single with little obligation financially speaking. With my current budget, I have $1800 per month of leftover income. I currently live with my grandparents while I am planning my next move.

I want to move into my first house and get some first-hand home owning experience. I was then planning on buying my first rental income property. I've been reading books and the internet, researching the field and becoming familiar with it all.

I wanted to ask the veterans out there who are older and much wiser, what you would consider doing in my situation. I could live with my grandparents even longer, to save up for a larger venture, but I'm about ready for a place to call my own.

Any advice is appreciated.

-Brandon

[Harry M.]

Hey Brandon,

One possibility is to look for a duplex where you could get close to break even by renting out one side and living in the other. There are a few benefits to this that I see:

1) Since it would be an owner occupied property, you would not need the larger downpayment required for an investment property (typically 25%). You can typically get in with around 3.5% down w/ an FHA loan, I believe.
2) You get your own place, while still leaving your 1800/month mostly intact, making it easier to save for the downpayment on your next investment property, which would require the larger downpayment.
3) You get hands on experience managing a property and start learning about all the things that go into finding, buying, and maintaining a property.

Of course, there are downsides, such as living right next door to your tenants - no biggie if they are great tenants, not so great if they are a pain in the rear. Finding a duplex that will fully break even on income from just one side it also very difficult, though not impossible - so definitely expect to really have to search for the right deal.

The only other advice I have is to make sure that you have some money saved up for expenses after closing to get the property up and running. Filling vacancies, taking care of deferred maintenance, and bad luck (larger items deciding that this is their time to break).

Good luck. It seems like you are way ahead of the game being where you are coming out of college.