How to Get Started in Multi-Family Homes.

Question

Hi all, I am a recent college graduate (23 years old) with no student debt. I majored in finance and marketing, and I am currently a credit analyst at a local bank. Ever since I graduated, I have been educating myself as much as possible on how to create wealth in RE. I'm obsessed with it and eager to start. The current market I live in does not offer a bunch of opportunity because it is a smaller and lower income town - I plan on moving to a city (not for sure where, but I am looking at many). In my opinion, multi-family and apartments is the way to go. I am looking for advice on how I should approach my 1st deal, as well as developing relationships with other hard-working and respectful investors. Cant wait to hear from you guys! :)

Jalen,

Nick B. · Answer

This blog post is just in time to answer the question above:

https://www.biggerpockets.com/renewsblog/cities-rental-investingdata/

Kristina Heimstaedt · Answer

To add to @Nick B.'s point, I would work on accumulating cash. Start there and invest in a duple rather than a single family or anything and live in half. The other option is to buy a single family and rent some of the bedrooms. Whatever you can do to minimize your expenses right now is probably the way to go for now.

Given that you're familiar with financing, I would focus more on targeting a market and move to that particular city. If you think Atlanta is great, scope that out and go there eventually. If you think Boston is the place to be, go there. I would choose based on the marketplace with the best opportunity though. The idea behind that being that hopefully you can obtain both cash flow and appreciation when you're ready. Getting appreciation and cash flow is like getting a successful stock with dividends that provide returns monthly rather than quarterly or yearly. It's pretty awesome. And if you choose to invest in a personal home in your city, you can also open a HELOC and get more financing for remodels or purchases.

Happy earning and shopping!!!

Account Closed · Answer

It's great to move somewhere with opportunity, but you have to enjoy living there too.

I'd go to a growing city (in terms of population and jobs) - this will likely benefit you from both a professional standpoint as well as an investment standpoint.

If I was in my early 20s, I'd house hack as @Kristina Heimstaedt mentioned.  If you can eliminate some or all of your housing costs, you can really ramp up your savings.

Scott Runyan · Answer

@Jalen Henningsen I am in a similar position trying to get started and focusing on multifamily. I haven't done a deal yet but my advice is to just keep your head down and keep working. The multifamily market is hot right now and deals are hard to come by. Keep learning and networking.

As far as location goes, I will throw a vote in for Atlanta. Multifamily is crazy here right now so that is a negative but it is a great place to live with a low cost of living.

Adam Sheren · Answer

@Jalen Henningsen - all great suggestions from above. House hack, become a Broker, move to a larger city, etc. I tell this to all newbie's that I respond too. Your biggest asset in RE investing, will be your network. This get's proven to me time and time again.

Continue to self-educate (books, blogs, BP, etc.) and strengthen your network. Join meet-ups, local landlord/REI groups, and find yourself a good mentor.

Good Luck, Sir!

Kristina Heimstaedt · Answer

@Jalen Henningsen I personally like the marketplaces that haven't just been flooded with millennials for the sake of jobs and affordable housing. I personally like a combo of infrastructure and vacation destination. I think that combo allows you to hedge your bets and insulate yourself well. I think it's why you've seen California and Colorado come back so hard. I invest locally, but if I didn't, that would be how I'd play things.

Jalen Henningsen · Answer

Thank you @Nick B.

@Kristina Heimstaedt do you know which marketplaces might have the best opportunity in the near future?

Nick B. · Answer

MF is a cash-intensive sport. Since you've just graduated, I assume your cash position is not significant. With that in mind, your best bet is to join one of the nation-wide commercial RE brokerages such as CBRE or Marcus & Millichap and become a broker. This will serve two purposes: you will meet plenty of buyers and sellers and build relationships with them while earning enough commission to save and invest later on.

How to Get Started in Multi-Family Homes.

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