19 y/o with goals yet can't get funding for deal. What do I do?

Question

I'm 19 and I've have been working as a real estate agent for over a year now. I've done a bunch of research, read books, worked with investors on flips, etc. for months now and I feel as though I'm ready to start with my first investment property. The problem is finding the deal. The moment the question of age comes around, everything gets turned down. What do I do? Where do I go? Or who do I work with to get this started? It's not a question of drive because the drive to succeed is there... Funding is the problem, especially here on Long Island, NY.

Sasha Mohammed · Answer

Your age should have ZERO to do with this, @Christopher Valerio. I'm so sorry that's been your experience so far!

It would make more sense that you're being denied based on length of time as self-employed, income, credit, etc. rather than age alone. I'm making an assumption here (correct me if i'm wrong) -- as a RE agent, you write off most of your income? Therefore when it comes to qualifying for a loan, you don't meet the DTI requirements to qualify?

You may have better luck going with a commercial lender (don't panic, they're rates aren't THAT bad) where they qualify you based off the income generated from the property. You'll have to put a bit more down than you would with consumer financing, but as long as the property cash-flows after all the expenses/ carrying costs, you should qualify, 19 years old or not.

Wishing you the absolute best of luck! Stoked to see young people in this industry who are hungry and diving in head-first :)

Tom S. · Answer

@Christopher Valerio  Live in the house and rent out rooms or units if possible.  You can do an FHA loan and 3.5% downpayment going that route.  I know of a lot of people who started out that way and were very successful over time.

Other methods include owner finance deals.  I did a few purchases starting out for 10% down.

Good luck!

- Tom

Account Closed · Answer

Do you have $2,000-$3,000?

If so you may want to get into airbnb arbitrage. You can make a lot more money per unit that you will ever make doing a regular lease. A good estimate is around $1,000 per month per property net profit.

Good luck!

David Hooper · Answer

The guys at BP always say this, and I think it's really true--if you find a deal, find a REAL DEAL where there's money to be made, share that with everyone in your sphere and the money will appear. Get out to the real estate networking meetups, or start hosting your own. You've probably had local lenders take you out to coffee/lunch, you've probably picked up a couple real estate agent mentors as well. If you're connecting with the right people, they should have had some level of success in their own businesses, and potentially have capital. Or they can connect you with others who have capital.

It probably will help if you can partner with someone with some gray hair, and even if that just means you'll be borrowing their name/credibility at first, that's one way to overcome the "age" hurdle. A lot of great agents build a "buyer's list" of investor types who have the capital but don't have the time to get out and find deals. Exchange your time for that capital, knowledge, and experience. Bring them a real deal and you'll get the money to make the transaction happen. Be sure not to get greedy and offer to take a smaller split of profits -- it's a sign of good faith for more deals where you'll have your network of people who can provide private capital in the future.

Saravanan Saravanan · Answer

@Christopher Valerio

Try to find a local private lenders in REIA meet up groups.  May be you can do 10% or 20% down; then the investor can fund the rest.

Never give up!

Account Closed · Answer

Christopher,

Of course, airbnb arbitrage is where you rent a home from a landlord and then list it on airbnb and collect the difference. You don't need to own a home and in many cases all you need is enough capital to get the place under a lease agreement which can be very little if the place is already furnished.

$1,000 per month net profit is a pretty good estimate but it can range from $500 - $10,000 after expenses depending on the type of property, location, success of the property, etc.

$2-3K is plenty to get your first property and then you can use the free cashflow to expand your portfolio if you don't have any more capital.

Here's a BiggerPockets article I just wrote that explains the model in a lot more detail

https://www.biggerpockets.com/blog/airbnb-arbitrage

Good luck!

Christopher Valerio · Answer

@Jason Allen would you be able to elaborate a little more on that please? $2000-$3000?

Christopher Valerio · Answer

@Tom S. Sadly house hacking and FHA loans aren't an option for me at the moment due to personal reasons but thank you for the advice!

Christopher Valerio · Answer

@Sasha Mohammed thank you! I'm going to look into it... Hopefully I can get started really soon. I feel prepared enough even at 19 that I'm sure I'll be successful. Obviously we can all learn more, we can never know enough but... I'm ready! I appreciate you taking the time to reply. Thanks again.

19 y/o with goals yet can't get funding for deal. What do I do?

Most Popular Reply