Hi BP Community, I am 24 years old with a job that pays me $80k-90k, I have saved 65k and counting with all debt paid. I do work long hours during the week (10-12 hour days). My goal is to be financially free as many of you are and I would like to get your opinion from those who have done so using real estate. Should I invest in MF Syndications for the next few years? I like the idea of being passive, but will this gross me the most money to become financially free? I have listened to several podcasts where investors have stated MF Syndications are good for those who've already made a ton of money and want to park it somewhere - am I too early to start investing in this asset class? Should I save more and do something else? I feel like 50k wont take me to financially freedom if I am only receiving 8-10% as an LP, is this a reasonable statement to make? Or should I invest on my own in smaller properties (2-4 units)? I was trying to do this for the last year but have been absolutely struggling to find any good deals in my market - currently looking at upstate NY and CT. I also work a lot during the weekdays so i am not sure this would be best. I could always hire out a PM once a find something, but all good deals are usually swept off the market in a matter of days and I seem to be left with crumby MLS deals. However, I am young and will do whatever it takes to become financially free as soon as possible since I would like to quit my W2. If that means trying to invest more in smaller MFH because it generates more CF - I will do just that. Thank you in advance BP community!

24 years old, 65K+ saved & No Debt

Rental Property Investor · Marianna Florida · Member since 2011 · 357 posts · 169 votes

7y

Do not hesitate to invest some of it in RE and/or multi family education. Start in the BP bookstore (no I don't work for BP lol) You'l learn what to do with your money and how to get your first deal.

1 Reply

Theresa HarrisPro Member

Member since 2019 · 15k+ posts · 11k+ votes

7y

First, great job saving $65K and being debt free. Many people here are not financially free, they own properties, but also have mortgages on them. Keep saving while you are figuring out what you want to do. If you are working lots, you will either need to find a good property manager or partner with someone you can trust. If you will be living in your current city for a while, you could also look at buying a home for yourself where you can rent out either a suite in the home or rooms. It would mean a lower down payment and ultimately you could turn it into a rental property a few years down the road if your situation changes.

2 Reply

Philip Johnson

Rental Property Investor · Hartford. CT · Member since 2018 · 178 posts · 54 votes

7y

Mf syndicating sounds pretty cool to start with. But I'd get experience first. Pickup one SF that you can net a few hundred off and see if you like it. This business isn't for everyone. If you don't have any time you'll have to hire rehab out.do you already own your own home ? I'd start there.

1 Reply

Bob B.

Investor · Jasper GA · Member since 2015 · 1k+ posts · 1k+ votes

7y

Great job of saving money and staying out of debt. I think you will do just fine.

2 Reply

Bjorn AhlbladPro Member

Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes

7y

@Ted Baker Congrats on the debt free and well paying job! I would continue to read and post on BP, attend podcasts etc. I would also join an REI group and/or the State LL association and hang out with other investors to gain their insight.

3 Reply

Ted Baker

OP

Member since 2019 · 9 posts · 3 votes

7y

Originally posted by @Bob B.:

Great job of saving money and staying out of debt. I think you will do just fine.

Thank you very much Bob

0 Reply

Ted Baker

OP

Member since 2019 · 9 posts · 3 votes

7y

Originally posted by @Philip Johnson:

Mf syndicating sounds pretty cool to start with. But I'd get experience first. Pickup one SF that you can net a few hundred off and see if you like it. This business isn't for everyone. If you don't have any time you'll have to hire rehab out.do you already own your own home ? I'd start there.

Agreed, I will do some more research on MF syndications

0 Reply

Ted Baker

OP

Member since 2019 · 9 posts · 3 votes

7y

Originally posted by @Bjorn Ahlblad:

@Ted Baker Congrats on the debt free and well paying job! I would continue to read and post on BP, attend podcasts etc. I would also join an REI group and/or the State LL association and hang out with other investors to gain their insight.

Great point, networking wouldn't hurt anyone!

1 Reply

Frank Geiger

Rental Property Investor · NC · Member since 2018 · 776 posts · 776 votes

7y

Honestly if you want to remain "passive", it's going to take a few years before you start to see the return on your investment. Maybe you purchase one property or two a year with conventional loans. It works. It will just take a bit longer compared to recycling the cash into more properties. You may want to look into turnkey.

1 Reply

Ted Baker

OP

Member since 2019 · 9 posts · 3 votes

7y

Originally posted by @Frank Geiger:

Honestly if you want to remain "passive", it's going to take a few years before you start to see the return on your investment. Maybe you purchase one property or two a year with conventional loans. It works. It will just take a bit longer compared to recycling the cash into more properties. You may want to look into turnkey.

Hi Frank, thank you for the reply. I apologize but do you mean by it will take longer than recycling the cash into more properties? Do you mean to say investing in syndications will take longer than investing in one or two properties a year? Thank you.

0 Reply

Matt H.

Real Estate Broker · CA · Member since 2016 · 243 posts · 226 votes

7y

@Ted Baker 100% Buy a 3 or 4 unit owner occupied, live in 1 and rent out the others. This sets you on the right path. Even if you went to be passive eventually you have to understand how to do it yourself. And you can’t get better leverage or terms than the owner occupied. Fastest way to financial freedom and only really possible earlier in your career.

2 Reply

Frank Geiger

Rental Property Investor · NC · Member since 2018 · 776 posts · 776 votes

7y

@Ted Baker I may have misinterpreted your question. Investing in MFH syndications are a great way to get a good ROI and remain passive.

0 Reply

Alina Trigub

Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes

7y

@Ted Baker

Congrats on getting a high paying job at 24 and deciding to invest so early in life! Welcome to BP community!

Here's what I would do if I were to start at 24 and wanted to quit my W-2 soon:

1) educate yourself on various types of investing (not just RE, but also Wall Street investing).

2) in terms of being active or passive, here's an article that should give you some guidance on the decision: https://www.biggerpockets.com/member-blogs/10850/8...

in general, if you want to retire from your job soon, you must become active investor. while it will take more of your time but it will also allow you to accumulate the income level desired to leave your job sooner! you need to select a niche within RE which sounds like you have - MFH investing and after you educate yourself, take action!

3) join the FIRE movement if you haven't. (google it if you don't know what it is.)

4) diversify into multiple investment types (again by first educating myself and starting with one investment at a time)

Best of luck!

1 Reply

Mo Farraj

Brooklyn, NY · Member since 2017 · 53 posts · 19 votes

7y

@Alina Trigub You make a lot of great points.

However in regards to number 2, how would active investing give Ted better returns with 60k?

For example, let’s say he put 25% down on a 200k 2 family generating 2.2k a month (which is realistic in NY/CT). After all expenses and savings for future repairs/expenditures - he might come out with 100-300 a month. This includes a PM since Ted looks like he has a fairly tight schedule.

If he were to put it in a MF Syndication, a 10% a year return on his 60k would be over $500-$600 a month if all goes well.

Let me know you thoughts, thank you!

1 Reply

Taylor L.

Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes

7y

Congrats!

It seems to me your biggest problem is lack of time during the day.

In my opinion, there are 3 ways to invest that you should consider

1) Syndications (OK, you did)

2) Turnkey single families

3) House hacking - buy a place and get roommates

You already know about #1. These will not require any time out of your day once your funds are invested.

#2: There's a wealth of knowledge out there. Folks you can research to learn more include Marco Santarelli, Ali Boone, and Chris Clothier. You'll use 3rd party property management, so minimal work during the day. However, you do have to manage your manager quite a bit.

#3: Do it right and you can do better than living for free. That is if you can stand to have roommates. I can't, so I didn't do this at 24. House hacking would get you started as an investor, free up more of your W2 income to invest.

I'm a syndicator and I invest passively in other syndications, so you can say I've drunk the Kool-Aid. If you want to go that way, your next steps should be to continue your education and to network with syndicators in person and online. Build relationships and get deal flow coming in, that way you can learn more deeply.

1 Reply

Ted Baker

OP

Member since 2019 · 9 posts · 3 votes

7y

Originally posted by @Alina Trigub:

@Ted Baker

Congrats on getting a high paying job at 24 and deciding to invest so early in life! Welcome to BP community!

Here's what I would do if I were to start at 24 and wanted to quit my W-2 soon:

1) educate yourself on various types of investing (not just RE, but also Wall Street investing).

2) in terms of being active or passive, here's an article that should give you some guidance on the decision: https://www.biggerpockets.com/member-blogs/10850/8...

in general, if you want to retire from your job soon, you must become active investor. while it will take more of your time but it will also allow you to accumulate the income level desired to leave your job sooner! you need to select a niche within RE which sounds like you have - MFH investing and after you educate yourself, take action!

3) join the FIRE movement if you haven't. (google it if you don't know what it is.)

4) diversify into multiple investment types (again by first educating myself and starting with one investment at a time)

Best of luck!

Wonderful reply, so thoughtful - I am very grateful for your response. However, I do agree with Mo in the comments section, do you mind sharing your thoughts on that? How would active led me to financial freedom faster?

A typical 2 family in CT is about 200-220k that rents for a total of $2k-$2.4k - with 25% down id pay 50k. Now with all expenses factored and a PM, my cash flow wouldn't be more than 150-250 dollars a month. Btw these aren't just numbers in CT, I have also been checking out upstate NY and this is roughly in the same ball park.

If i were to invest in a MF Syndication, 50k might get me an 8-12% return with little to no work past the due diligence for the sponsor. This is can generate me $400-$600 a month. Am I calculating my numbers incorrectly or not factoring in something?

Thank you in advance.

0 Reply

Alina Trigub

Rental Property Investor · Glen Rock, NJ · Member since 2015 · 3k+ posts · 2k+ votes

7y

Mo,

it is not that black and white. Besides it depends in what market Ted buys a property. Last but least syndications don't start at 10% a year while they may certainly reach such point in the future years.

Originally posted by @Mo Farraj:

@Alina Trigub You make a lot of great points.

However in regards to number 2, how would active investing give Ted better returns with 60k?

For example, let’s say he put 25% down on a 200k 2 family generating 2.2k a month (which is realistic in NY/CT). After all expenses and savings for future repairs/expenditures - he might come out with 100-300 a month. This includes a PM since Ted looks like he has a fairly tight schedule.

If he were to put it in a MF Syndication, a 10% a year return on his 60k would be over $500-$600 a month if all goes well.

Let me know you thoughts, thank you!

1 Reply

Charles Kao

Specialist · Grand Rapids, MI · Member since 2016 · 1k+ posts · 611 votes

7y

@Ted Baker

Its really hard to get into investing when you work that long of hours so I would invest passively if I were you and also look at finding something that does not use all your free time as far as W2 job. You do need to spend quite a bit of time vetting your deals you invest passively in. Also consider does real estate itself attract you or is if the self employed route appeal to you more with real estate being the best outlet to you at this point. This will be a good question to answer for determining how you invest.

1 Reply

Ted Baker

OP

Member since 2019 · 9 posts · 3 votes

7y

Originally posted by @Charles Kao:

@Ted Baker

Its really hard to get into investing when you work that long of hours so I would invest passively if I were you and also look at finding something that does not use all your free time as far as W2 job. You do need to spend quite a bit of time vetting your deals you invest passively in. Also consider does real estate itself attract you or is if the self employed route appeal to you more with real estate being the best outlet to you at this point. This will be a good question to answer for determining how you invest.

Thank you for your reply Ted. What if its the financial freedom aspect of real estate investing? I am not absolutely in love with real estate but I do love the cash flow, tax benefits, and freedom aspects of investing in it. What would you do if you were in my shoes? I don't want to spend too much time overthinking if i should do this or that or the next thing.

0 Reply

Ted Baker

OP

Member since 2019 · 9 posts · 3 votes

7y

Originally posted by @Taylor L.:

Congrats!

It seems to me your biggest problem is lack of time during the day.

In my opinion, there are 3 ways to invest that you should consider

1) Syndications (OK, you did)

2) Turnkey single families

3) House hacking - buy a place and get roommates

You already know about #1. These will not require any time out of your day once your funds are invested.

#2: There's a wealth of knowledge out there. Folks you can research to learn more include Marco Santarelli, Ali Boone, and Chris Clothier. You'll use 3rd party property management, so minimal work during the day. However, you do have to manage your manager quite a bit.

#3: Do it right and you can do better than living for free. That is if you can stand to have roommates. I can't, so I didn't do this at 24. House hacking would get you started as an investor, free up more of your W2 income to invest.

I'm a syndicator and I invest passively in other syndications, so you can say I've drunk the Kool-Aid. If you want to go that way, your next steps should be to continue your education and to network with syndicators in person and online. Build relationships and get deal flow coming in, that way you can learn more deeply.

Love your response, very thorough and helpful! Have you ever invested in a turn key? Seems a bit scary investing in an area you may not be too familiar with especially after everything that happened with the Morris investment situation for example. How are you experiences investing in syndications? Any regrets or things you've learned a long the way? Should I wait a bit and save more before investing. I just feel like 50k in a syndication wont take me far by year end - open to suggestions/thoughts.

0 Reply

Jaysen Medhurst

Rental Property Investor · Greenwich, CT · Member since 2015 · 4k+ posts · 2k+ votes

7y

@Ted Baker, you're painting with a VERY broad brush when it comes to CT properties. Stamford if very different from Waterbury, which is very different from New Britain, which is very different from Storrs.

In some markets $200k is a fine duplex, in others its a quad, in others the agent will laugh you off of the phone.

Figure out what areas might work for you and then focus like a laser to find good deals.

BTW: I think you're being very optimistic to expect 8-12% cash-on-cash returns through a passive syndication. Most of the experienced syndicators I follow are talking MAX 8% and that's after stabilizing a property.

1 Reply

Taylor L.

Rental Property Investor · RVA · Member since 2016 · 5k+ posts · 4k+ votes

7y

@Ted Baker I think you need to step back and quantify your financial goals a bit more. What does financial independence mean to you in dollar terms? When are you committed to achieving it? Then work backward.

Starting with $50k and investing passively will take quite a while to achieve financial freedom, no matter what you invest in.

0 Reply

24 years old, 65K+ saved & No Debt - What would you do?

24 years old, 65K+ saved & No Debt - What would you do?

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