What to do Right Now?

Question

Hi all, I'm 23 years old and 7 months into my first job out of college in the Fox Valley, Wisconsin area.  Still have student loans to pay off (looking at about 2 years to do that) and then would most likely want to buy a home for myself after that.  My question is what can I do right now to help better prepare myself for Real Estate investing?  I am fascinated by the idea of purchasing small multi-families (due to their cash flow potential) and just keep building up a portfolio from their with more and more multi-families.  Like I said I'm still a little ways aways from being able to purchase my first property but would appreciate any advice about getting started!  Thank you!

Scott Schultz · Answer

that first home you want to buy, Buy duplex, triplex or 4 plex, they finance as residential owner occupant, your tenants pay your mortgage and can get long term low rate financing. you will probably live in an apartment anyway, why not own the apartment?

Jonathan Greene · Answer

Read some books on multi-investing. Listen to BP podcasts, specifically ones with people around your age who did it after college and in their first job. Save as much money as possible! Also, find local REI meetups and start making some REI friends and acquaintances where you can get real-life, local info on the markets around you where people are buying multis. That's a good, slow start as you learn and prepare for down the road.

Carl Fischer · Answer

Hi @Evan Koehler. I think it's great at 23 years old that you're looking into real estate. It's been very good to me in my lifetime. It's good to read books as @Jonathan Greene suggested, but I also think its important to make a decision and take action (you can read all the books you want about swimming, but you don't really know what it is until you're in the water).

@Scott Schultz's recommendation is good (buying your home as a duplex,triplex, or fourplex). That's a good way to ease into real estate with little or no risk. You also need to look at all the different ways to invest in real estate. You can buy single family homes, multifamily homes, large apartment buildings, and raw land and develop those investments including industrial buildings, warehouses, office spaces, etc. and have some sort of diversity just in real estate. It may be worthwhile before your student loans are paid off, as homes generally will provide you tax write-offs, and you may be able to pay off your student loans even faster this way. You may also want to replace your job with real estate income (or you may really love your job and want to stay in it -- if that's the case, you may need to decide what time of real estate you want to be in depending on the time you have available to invest in real estate). I would then look at tax-advantaged investing using IRAs and 401(k)s and other tax-advantaged accounts and real estate, as tax-free income for life has worked well for me and my Roth accounts. If you have any further questions, I would be happy to connect.

Marlen Weber · Answer

In the mean time, read books, listen to podcasts, find a mentor or someone you can shadow to learn to ins and outs of the industry, and most importantly, your area before you dive in. Best of luck.

Jonathan Greene · Answer

@Evan Koehler I think in terms of "getting started" info, the BP podcasts are super ripe for that. You just look at the titles and look for investors in their low 20s who just got into it and then went crazy. You don't need the crazy part, but the how they got started is always in there and better than a book on getting started because you can hear so many different journies in their own words.

Evan Koehler · Answer

@Jonathan Greene thank you for the feedback! I have read a couple of the Rich Dad Poor Dad books which really helped shift my perspective of how to build and grow wealth.  Additionally, I have read The Book on Rental Property Investing which really opened my eyes to how attractive real estate is at accomplishing my financial goals.  Do you have any book recommendations more focused on multi-property investing or more nitty gritty of getting started in real estate?  Thanks again!

Evan Koehler · Answer

@Scott Schultz I have heard of house hacking before and am very interested in doing that.  My girlfriend and I currently live in an apartment so moving into a duplex or triplex will give us essentially free housing while we build equity on the building.  Any recommendations on the process of looking a smaller multi-families?  Thanks for the advice!

Jamie Labrec · Answer

@Evan Koehler given the information you provided I would recommend buying the book "Investing in Duplexes, Triplexes, & Quads" by Larry Loftis.  I firmly believe this book will help you in your early decision making process and determining how you will enter the RE market as an investor.

Nicholas Patrick · Answer

@Evan Koehler Hello,

I seem to be in a very similar position. I just graduated college this past April and live in an apartment as well. I would like to share my plan and bounce ideas around.

My plan is to contact a relator specializing in investment properties. I will sign up for their emails and see every property that fits me. I already designed a spreadsheet to help me analyze theae or you can use BP calculator. On top of this, and more importantly, I will be personally writing direct mail post cards to those who have property that fit my criteria seeing if they want to sell.

I am hoping to househack, and have my first one secured by the end of the year. A property with 2-4 units financed with an FHA loan or maybe a 203k loan depends on repair costs. I plan to do this maybe two or three times before finally buying my first official personal home. At that point, I will officially start my business and start scaling until I reach financial freedom.

People tell you to read books, listen to podcasts, and the like, and even though I dont disagree there comes a point that you just need to take action.

Hope this posts helps you in any way.

Phillip Davis · Answer

@Evan Koehler An owner-occupied property 2-4 unit home with an FHA 3.5% down payment is an amazing tool to get started especially at your age, it's easier without a big family, although not impossible! If you have a good enough credit report and some savings why wait to pay off student debt? You could be saving a ton of money in housing costs and apply the extra to the student loan, killing two birds with one stone!

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