Key advice for someone investing in real estate in early 20s?

Question

I am eager to learn as much as I can about real estate investing. I’ve been reading about RE and listening to various podcasts but now I am looking to hear from the BP community.

What is 1 piece of info you wish you were told while investing in real estate in your early 20s?

Brandon Rush · Answer

Hey Hannah, I know you asked for one but here is two.

1) House Hack! Do not waste your money jumping into a single family home chasing the American dream. Unless your intent is to house hack that single family by renting out rooms, I would recommend jumping right into a multi family property. Doing it so young will get you accustomed to house hacking and it will not be a huge deal for you to repeat the process. Easy way to acquire properties over a few years.

2) Surround Yourself With Like Minded Individuals - You are the average of the 5 people you talk with the most. Constantly surrounding yourself with the REI crowd will advance you way faster than surrounding yourself with those who are not on the same page as you.

Good luck on your journey and enjoy the ride!

Darius Ogloza · Answer

Not so much told in my 20's as much as understood that everything you learned in kindergarten was true:

That the little pig that builds the house out of stone retires in comfort, while little pigs that build out of straw and sticks get eaten; that the tortoise does beat the hare in any race and that you should never try to swim across a river with a scorpion on your back.

Alexander Szikla · Answer

@Hannah Wright - I would recommend buying a 3 or 4 unit property plus a basement unit. You cannot legally rent out the basement but you can live in it yourself as the landlord. Invest in it. Make it really plush. Enjoy your home. And have everyone else above you pay down the mortgage.

The reason I say this is because you can use an FHA loan (requiring only 3.5% down) to purchase up to 4 units (basement would be a "stealth" 5th).

Having all these units in one property also provides you with fantastic efficiencies as far as insurance, maintenance, etc.

Incrementally add value to units as you have turnover (i.e. add bedrooms if possible, update kitchens/baths, etc.)

Basically a recipe to 1) scale quickly 2) live for free 3) accumulate equity 4) clip cash flow

Feel free to reach out with any other questions!

Blaine Alger · Answer

Congrats on making the first steps and interacting in the forums in order to further your knowledge of the industry! Continue to educate and network on BP because there is so much great info and like minded individuals to surround yourself with.

1 piece of advice that I wish I  would of been told:

Banks are not as eager to lend to a 20 yr old then you think they are.

Most people would not find this as surprising but I guess I was a little too optimistic. Banks want to see some type of job history and sometime even 2 yrs of w-2 income. Not every bank is the same and there are definitely some ways around this but the first step is just going to talk to every banker you know. They will have a better idea of the loan products that they can offer you and will be able to let you know what to do in order to get approved. If you build these relationships now, it'll provide you many opportunities in the future.

Feel free to reach out if you have any other questions. I am happy to help!

-BA

Cindy Bacigalupo · Answer

@Hannah Wright

House hacking means buying a house or condo and having roommates. That’s what set me up for success then fold! Pay it off ASAP. Then add income streams and attack more.

Filipe Pereira · Answer

@Brandon Rush naaaaaillllleeedddddd it!

For me it is "trust your gut". I bought my first place at 22/23 and the number of people who literally came out of the woodwork to tell me landlord horror stories, or that I was crazy to get into this, was too fricken high.

3 years later, I quit my job, started a new business and still watch them post on facebook about hating the job they're clocking into every day for 8 hours.

Meanwhile, I love what I do, and I am darn good at it! (making my own hours helps, lol)

Account Closed · Answer

@Hannah Wright

Hannah,

You’re already on the right path by digesting as much information as you can on real estate investing. Read books, listen to podcasts, watch webinars etc but none of that matters if you don’t take action that’s the best advice I can give. You have to pull the trigger and TAKE ACTION. Get a source of income if you don’t already have one right now, get your real estate license and start building relationships with investors, agents, developers anyone in real estate. I’m 21 right now and have been investing in real estate since I was 16 by flipping my first house with money I used from my minimum

wage job, partnering with a contractor and leveraging hard money.

Feel free to message me on here with any questions you have.

Hannah Wright · Answer

@Tristen Mickelson Wow that’s awesome to hear!

I couldn’t agree more with taking action. My first investment will be a place I will also live in so I am beginning the process now of figuring out what what will work best (house hacking a single family or a duplex).

I am just curious what motivated you to enter the industry so early?

Hannah Wright · Answer

@Alexander Szikla That’s great advice, thank you for sharing! I have not thought of utilizing a basement (if there is one).

I was originally thinking of aiming for a single family and renting out a room but maybe a duplex or place with 3/4 units is something I should be considering more.

Thanks again,

Hannah

Blaine Alger · Answer

@Hannah Wright

I don't think it matters as much with credit union v.  Bank.

You'll definitely have better luck with a smaller bank/credit union. Wells Fargo won't be lending you any money, but your neighborhood bank will be more willing to work with you.

Key advice for someone investing in real estate in early 20s?

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