21yr old First Time MultiFamily Buyer in DESPERATE Need of Advice

[Jenny Letto]

Hello Everyone! This is going to be a LONG one!

I just turned 21 and I am preparing to make my first purchase no later than May of this coming year. I am very excited, but I want as much advice as possible as I am aware that even with all the podcasts, books, and webinars, nothing beats actual experience! I'm going to list as much info possible below regarding my plans and current situations. I would love to hear any and all unbiased advice and would be happy to treat anyone to coffee for more insight! I couldn't be more excited for this leap, as I am ready to truly start building for retirement and replacing my monthly income with passive investment income. It's my deepest desire to prove to my fellow millennials that not only is it extremely possible, but SUPER necessary to break away from the "standard" version of life and income that society tries to shove down our throats. Anyways, here are some notes + questions!:

I would LIKE to purchase a duplex here in Los Angeles through an FHA loan and owner-occupy one unit for minimum two years while renting the other to cover my mortgage costs, while continuing to work the same hours and increase my income to simultaneously SAVE what I WOULD pay for rent (had I not bought this property) to increase my emergency fund and build another down payment. Currently I am saving around $1,000-$1,500 a month, so without paying rent I could put away around $3,000+ a month.

To provide some insight, I have a close friend who has bought a duplex in Mid-City LA (still very affordable) and within the last 2.5 years his property has appreciated over $200,000. I'm aware that this doesn't mean I can expect the exact same result. With that being said, I AM looking in this area because of the prices and after doing a ton of research as well as talking to other RE professionals, this area is supposed to continue a ton of growth and development including new restaurants, shopping structures, libraries, and public transportation systems. 

Another option I am considering is buying in Pasadena, where the permits are supposed to make it easier to build on your property. I would then take $20,000> to build either a studio or SMALL one-bedroom back-house that I would like to AirBnB. AirBnB is extremely popular and widely used here in LA, and I could get up to 4x market rent if I'm booking frequently, rather than renting the back house out for market price. I am planning on reaching out to others who are currently AirBnB-ing in this area to get a realistic idea of how often they're able to book, and from there decide if it would be low-risk. Pasadena has a few great colleges and a handful of huge events that happen either weekly or annually, which people come from out of town or out of state for. If AirBnB failed, I could just rent for market value to a long-term tenant. My thought is by building this back house, I could automatically appreciate my place because once I sell it the new sqft will be applied to the $/sqft. Am I wrong?

Within 2-3 years as long as the property appreciates, I would like to 1031 into a larger property with more units and/or 1031 the BULK majority for a down payment on a larger property with more units- then take $50,000< out of that sales total to buy two smaller single-family homes OUT of state (I would love to buy in Georgia close to Atlanta as I fully believe through colleagues that it can be the next LA sooner than we know, due to the insane increase in development and tax incentive for the entertainment industry) and either Texas or Pennsylvania. I would like to buy these 2 properties next to universities and, rather than charging market value rent to single families, instead convert the homes into co-living situations and rent to college students for less than dorm fees. This could potentially allow me to double the market value, if not more. Side Note- I haven't gotten far enough to actually look at whether or not $25k each would be a good down payment for two homes in these specific locations but the amount is flexible. Does anyone have any insight on this idea?

I have saved about $40,000 to use just as a down payment, and intend to have about another $25,000 saved for emergency and renovations. With that being said, I would really like to only drop MAX $30,000 on my down payment with an FHA loan at 3.5% down (I believe that comes out to $857,142.85). I am really looking for some insight on FORECLOSED properties? I am very uneducated in that topic yet see a ton of AWESOME multi-family properties for dirt cheap and can't help but wonder if they're too good to be true. Any insight?

Here's a pretty personal one, but one I need a ton of help on. I pull in about $4,000/mo in income as an independent contractor. This can fluctuate to as low as $3,000 but never below that. My career also requires me to travel and I get paid $8,000-$15,000 in one sitting for each out-of-state or out-of-country deal closing; this year I'll be taking on 3-4 of those minimum. Problem: I JUST started making this income (after a hell of a lot of goal and financial planning, choosing to minimize my bills and work harder to increase my income simultaneously, say no to practically every social invite to work instead, swallow my pride and drive a ****** car, and say yes to every financial opportunity that is legal and follows my moral code plus feeds into a bigger picture lol) so I cannot prove this income for as far as two years back. I can prove it for maybe months back. I also, being newly 21yrs old and advised to never get a credit card, DON'T have credit. I don't have BAD credit, I literally just don't have any. I've bought my car cash and have always rented with others who had their own name on utility bills and just collected my portion. I could go out and get  credit card, but I'm slightly traumatized from my parents debt mistakes (hence motivation to build wealth young). MUST I get a card ASAP, anyways? If so I'll only charge gas and maybe minimal groceries on it and will pay it off on time always. Even so, will this even build an appropriate amount of credit within 5-6 months? 

Lastly, I DO has a cosigner. This person will not lend any financial help, but WILL cosign. Does this mean it is OK that I can't prove my income two years back and don't have credit? Also, my cosigner lived in Guam for decades (my birthplace) but just moved back to the Philippines. Guam is US territory and I believe the have dual citizenship. Does it matter if my cosigner does not live in the US? What if they still have dual citizenship? And what if they don't?

Again, I am fully aware that this is SO long and I don't expect anyone to read it all, but know that it is appreciated more than I could explain and I will pay you back in gratitude, coffee, and scones. Thank you SO much in advance!