Real estate, how do I start investing????

[Sullivan Moods]

Young investor Looking to get started into real estate, I’m 17 years old and have gotten preapproved on a loan. I’m looking to get into flips and rentals. Having trouble figuring out what I want, multi family’s are hard to find around here. I’m moving out as well so I just wanna live mortgage free, or just discounted lol. Is living in a single family home and renting out the basement a good way to get started into rentals? Just flipped my first house, my father made me do all the work as the project manager. Just looking to get some more capital as I have 35k saved up now.

[Erik W.]

@Sullivan Moods, hi and welcome to BP!

You're very motivated and goal-oriented for a 17-year-old.  Congrats!

The first thing I would do were I in your shoes is find a local, experienced real estate investor who might need someone to do grunt work for him. Offer to trade work for experience helping manage his properties. Every REI should have a basic level of familiarity with the laws, rules, ordinances, and best practices for their local market. I know if I found a young go-getter such as yourself, I'd be happy to pay you gas/mileage and a little for your time and also take you thru the basic ropes of being an REI.

A few other things to consider: 

1) In most (all?) states, you must be at least 18 years old to sign a legally enforceable contract, which would include a lease.  So mom may have to co-sign your leases as well for now.  She may not want to do that, as it exposes her to legal liability if something really bad were to happen.  Let's say your tenant has a slip and fall accident: the plaintiff's lawyer would probably sue both you and your mom.  Be sure she understands the risks here and that you both speak with an attorney regarding what kind(s) of liability insurance you need.

2) You are going to suffer prejudice because you are young. Most people have trouble trusting 17-year-olds to wheel and deal with "the big boys." Youth = inexperience and recklessness in the minds of many. Not your fault: just the way the world works. To be successful, you must overcome this hurdle. How so? Dress professionally is a good start. I'm in my mid-40s, so when I show up to a REI meeting in jeans and an untucked, collared shirt in my pick up truck, no one bats an eye. I'm just a "good ol' boy" who knows his way around the world. But you would probably want to at least wear slacks, a polo shirt, and maybe even button down shirt and tie. Or something that would qualify as "business casual." A jacket and slacks, perhaps. Let your clothing make a good first impression on everyone you meet. Either a clean shave or very well-trimmed facial hair and haircut too. You're not Mark Zuckerberg, in other words. Tech guys can get away with looking a little disheveled, but REIs want people to be confident in their maturity. You must also be punctual!  I cannot stress this enough.  Show up 15 minutes early to every appointment.  Excuses for being late will not be tolerated.  Look people in the eye when you talk to them.  Firm handshake.  Speak clearly and avoid using slang.  The typical "yadda yadda" job interview stuff.  And never, ever, B.S. someone.  Your credibility is like gold to you.  If you don't know the answer, offer to get it and contact them back the same day.  Don't make stuff up.

3) Regardless of age, you are going to have to hustle, hustle, hustle! There are a lot of people wanting to be REI's, especially in the MF sector. I would start with something that is relatively simple and plentiful in my local market, perhaps a SFH or a duplex. I wouldn't start with renting out a basement: there's a lot of weirdness having your tenant live below you in addition to all the basics of LLing. If it were me, I'd at least want a wall between me and them (i.e. duplex).

That should be enough to think on for now.  Good luck!