21 y.o. Heading into Real Estate

[Alex Puleio]

Hello BP, 

I am a 21 year old who has just graduated college. In the coming weeks, I will start off my engineering career for a top 4 Defense Contractor in Minneapolis, MN. I am extremely motivated to buy real estate when I get there. My parents have been doing buy and hold deals in the New York City area for around 20 years now, and it really hit me that this is something I love. My goal is to end up like the guy from Monopoly. 

As a 21 year old with a competitive salary, I plan on buying a multifamily home within my first year. I prefer to go solo on this. 

I need advice on how to set myself up. What are some things that I should do before anything else? I expect a bank to give me a loan since my income is high. The only thing is, I don't want to waste time saving for a down payment. The sooner I am in the game, the better. The homes I have been looking at are in the ~$250,000 range. So a ~$50,000 down pay would probably be required by a bank. 

Is there anyway I would be eligible for an FHA loan with 3% down? How could I potentially attract an investor to help me out? Any other ways to get around this?

Also, anyone who is already doing real estate in the Minneapolis area, I would love to talk and ask a few questions.

Thank you so much for the help & advice in advance. 

[Peter Kottwitz]

Hi Alex, welcome to the Midwest!

Typically lenders will required a 25% down payment on any non-owner occupied property, however you may find some willing to only take 20% down in a strong market like Minneapolis.

One thing I didn't didn't see you mention your post, do you plan to live in part of the multifamily home? If so, you may be able to get away with a 3-5% down payment since Duplex's, Tri-plex's and 4-plex's are typically eligible for FHA financing as long as they're all on the same lot/parcel.

If you're not planning to live in any part of the property, you may be able to convince the seller to do a CFD, or at least carry back some of the financing. So in your example, the seller would get $187,500 at closing, and would accept payments for the remainder over a certain time frame. This isn't all that uncommon now-days, you should be able to find sellers willing to do this pretty easily.

Best,