17 years old, I have about 28,000 cash on hand, What do I do?

Question

Hello, my name is Nicholas,

Ive been interested in real estate investing for a while now, I've been wanting to become a real estate agent since I was 15. I graduated High school a year early, so I can focus more on reading books and learning about real estate investing. Im getting close to being 18 now in the spring, and I have saved up 28,000 in total, I worked a local fast food for 8 months and recently quit. As well as some other business ventures, I am currently unemployed, trying to get a job in a real estate type of environment so I can gain some more experience. As well as have a good work history for the banks. I don't know if thats possible because I am only 17, but the question I have is what I should do with the money I currently have.

Do I use it to get a duplex or a quadplex? (Using FHA)

Do the BRRRR Method on a property and recycle?

Ive thought about going into wholesaling recently, and I know there are other opportunities out there to do with real estate investing, but I don't know what the best course of action is. the market is kind of in a weird state right now, and I'm thinking about waiting 12-18 months before buying anything. Im still new to the game so I don't have experience under my belt. Any advice like what you would do in my situation would be greatly appreciated, Im just a kid looking to learn and do well in the real estate investing world.

P.S. If you know any jobs I can get started with in real estate as a 17 year old that would be greatly appreciated as well.

Thanks!

-Nicholas

John B. · Answer

Id say triplex or fourplex with FHA and house hack.

Jacob Graves · Answer

I would work with a contractor and learn some trades at a surface/detailed level if you choose. You will need a job to qualify for any of the loans you want to get anyhow. I agree with above stack your cash until your 21 and have a better understanding/experience under your belt. Congrats on the hard work thus far, this is just the beginning.

Ricardo Hidalgo · Answer

I would invest the money back into yourself or look to create a business to learn the ins and out. When I first got into real estate, I focused on building out my team, systems and processes to scale quickly for the first few years. Now we have the luxury of excess profits that can be use to acquire multiple properties and leverage several LLC's. This allows us to  redistribute debts, collateral equities and have large business lines of credit to buy or flip more properties with little capital and better rates.

Jacob Lapp · Answer

@Nicholas Stevenson

Awesome work man!

I was in a similar position at 20. Working in the pipeline industry but got my real estate license on the side to save on commissions and side cash helping friends buy.  I was hyper focused on 4-units. I ended up getting a great triplex instead first time home buyer conventional loan 5% down. Then a duplex owner occupied 15% conventional Then another duplex 15% conventional then another triplex 10% down FHA 203k (massive rehab).

House hacking each one each year. And have a 10 unit portfolio now once this rehabs complete total Cashflow will be around $7500 monthly from 220k invested over the last 3 years. Portfolio currently worth about 1.6M and 1.1M of good debt.

All while working a W-2 job using my RE license a few times a year.

This isn’t to brag just some hope and to let you know that it doesn’t matter if it’s a duplex or quad.

I’d save your FHA loan for a larger property a lot of people use it on the first one so they can afford it but then wish they had it later.

I never refinanced. The BRRR method works great if you have the cash to do the full rehab to get the equity you want unless you really get a great deal. Private money or hard money at this point in your investing career should be off the table. You want to build a credibility binder. Have a couple good househacks under your belt and get the basics down before you start risking other people’s money. (I might just be projecting my own insecurities on you) I haven’t used anyone else’s money or partnered yet and am almost at the point where I’d consider it.

Time is your most valuable asset now. Focus on grinding and making money. Learning and developing relationships. Get your license and buy your first multi family ASAP! Keep us posted!

John Mathew · Answer

Wow! Hats off Nicholas.I would suggest that you look for a Real Estate Mentor

Before many successful real estate agents came successful mentors. Real estate is an industry where finding a great mentor can really slingshot a career. You can not only get to learn the ropes, but You can also get to practice the habits of success, draw on years of experience, make new connections, maybe get a referral or two, and witness the power of a great real estate company culture once you grow older.

Good luck on your real estate endeavors!

Conner Olsen · Answer

I recommend you House hack, join some investment groups, pay for courses, buy some books, intern/apprentice in a real estate related career and use the cash to float you while you don’t have a paycheck.

Michael Brattelli · Answer

@Nicholas Stevenson turn 18. Get your real estate license. Learn as much as you can and work your ass off. By 21 you should know your market and be able to spot a great deal when it comes up and be qualified by then. Purchase a quad with an fha loan and you’re off to a great start.

Nicholas Stevenson · Answer

Thank you for everyone who chimed in! This was amazing and super helpful, Im thankful for everyone who put in the effort to reply, It means alot to me, Ive taken all your advice deeply and keep looking back over them as I continue to learn and improve my knowledge. Again thank you all it means the world to me

-Thanks!

-Nicholas

Leo R. · Answer

@Nicholas Stevenson congrats on saving the money!

Before you do anything, it's advisable to study up, get experience, and learn as much as you possibly can about RE. Fortunately, there are innumerable ways to learn--listen to BP podcasts, read books, watch youtube videos, do an apprenticeship with a RE investor, work as a carpenter's apprentice, go to REIA meetings, etc., etc. Spend a couple years immersed in RE before making any big decisions with your money or your commitments (luckily, since you're young, time is on your side to learn all this stuff).

Once you've spent some significant time learning (both via RE media, and via actual field experience like an apprenticeship), then you'll be in a much better position to decide what to do with your time and money.

As others have mentioned, if your goal is to actually own profitable real estate, then house hacking a single fam or small multi fam property is a great way to get started. Generally, I'd say that house hacking is a much better way to start than BRRR'ing, flipping, or certainly wholesaling.

Why? Because, house hacking is comparatively simple and beginner-friendly (and therefore has the highest likelihood of success), but strategies like BRRR'ing, flipping, wholesaling, etc. are far more complicated, and have a far higher chance of failure because they involve so many "moving pieces".

Since you're from SLC, you'll like this analogy: would you tell a beginner skier who has zero experience to ski a double black diamond for their first run? (obviously, no). Beginners should start off on beginner terrain, where they actually have a chance to learn and succeed. A house hack is like that green circle beginner run (but wholesaling is like the double black diamond).

With a house hack, you can make money while learning many of the essential skills you'll need to succeed in RE investing (e.g.; how to analyze properties, how to engage in a strong due diligence process, how to screen tenants, how to manage the property, how to build a network of contractors, plumbers, electricians and other pros, how to manage the book keeping of the property, etc., etc., etc.  If you want to succeed in RE investing, getting this experience will be critical). So, you can make money and learn invaluable lessons with a HH, but it's typically a much lower risk strategy than BRRR'ing, flipping or wholesaling--which are strategies that (when executed poorly) can easily bankrupt a beginner.

Moreover, house hacking can be very lucrative, and there are multi-millionaires who built their fortunes on repetitive house hacking.

Now, having said all that, house hacking isn't necessarily easy (if it were, everyone would do it)...it's just easier than the more advanced strategies...House hacking still takes significant due diligence, skill in analyzing the market and the property, time and effort to learn about tenant screening and property management, the ability to anticipate appreciation/depreciation trends, etc., etc., etc....and even with lots of skill and preparation, things will still go wrong (vacancy, plumbing leaks, bad tenants, etc.)--but that's the nature of the game. As James Brown sang: you gotta pay the cost to be the boss.

Good luck out there!

Eliott Elias · Answer

Start building a portfolio early. Put down payments on 5 properties and increase your net worth. Your 30 year old self will thank you

17 years old, I have about 28,000 cash on hand, What do I do?

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