Investing in Real Estate in College

[Jean Chen]

Hi BP!

My name is Jean, and I am currently a third year college student studying business and living in the Bay Area. Recently, I've come to a place where I am financially able to support myself and my schooling. With the rest of my money, however, I'd like to invest it in real estate over the stock market. Therefore, my first goal is to take the step forward in purchasing a multi-family property in which I can move out of my home and become fully independent. However, because the Bay Area real estate market is so hot right now, it's hard to find a property that I'm satisfied with. 

Every time I run the numbers, I always seem to be operating a net cash negative, although I never include the appreciation of the property. I think what confuses me the most is how to use the calculators accurately in a way that helps me gauge whether the properties are actually worth purchasing or waiting. In the future, I definitely do plan on staying in the Bay Area upon graduation. Is there any advice for me, not only through accurately calculating cash flow, but also how to make an offer that doesn't break the bank? 

Thank you in advance!

[Thomas S.]

You will not likely find cash flow positive properties in your area. Most are faith investors relying entirely on appreciation to make a profit when they sell. You need deep pockets to supplement your tenants rent. Your best option is to invest out of state. Select an area that you will be able to find employment in after you graduate. If you plan to make money investing in real estate look beyond your back door for employment.  It's a big world out there.