Renting out a house in my 20’s (I’m 16)

[Jacob Swirtz]

I am 16 years old and I would like to start renting out a house by the time I’m 20. I’ve listened to many bigger pockets podcasts, and I’ve received many opinions from my father but I’m am still confused. I want to get into the electrician trade to build up enough money for down payments on houses, and my dad says that it isn’t possible for me to rent out a house when I am 20. Could anyone give me precise steps on how I could accomplish renting out a house by 20? Do I need to go to school in real estate? How can I get a down payment on a house around 5%? Will tenants sign with me if I’m new/young, and if I don’t have a real estate degree? I just need help and tips because I can’t find much on the internet for younger people interested in real-estate and how to pursue that. Thank you :)

[Russ B.]

I would second the comment about building your credit now. This will make it a lot easier to get started. 

If you have some established credit and can show income / 6-12 months work history (as an electrician), then you could buy a place with up to four units just like a single family with maybe 3.5% (or even nothing) down. Note that closing costs will add another couple percent upfront though, so 5% is probably a good target. 

This should be very doable over the next four years. Start by getting whatever type of job you can (bonus points if it's something related to the electrical trade, since that's what you want to go into - even working at a supply store), and then have your parents open a credit card with you as an authorized user. It doesn't matter if the card has a $200 limit.. banks just want to see you buy something and then pay the balance off over at least 4-6 months. Once you hit 18, you can open your own card and continue the same thing. As you do this, they may increase the credit limit, which helps your utilization as well. Also, your parents may be able to put one of the household utility bills in your name, which has the same effect of showing a history of on time payments. 

If your dad has rental properties, that would help too - he could let you manage one (or even transfer one into your name). If you can show a year or two of experience as a landlord, then a bank might let you claim 50% of future rent as "income" when you buy. 

Also don't forget your future day job - once you get established / hold the right certifications as an electrician, you can have your own company. This not only generates cash, but also potentially puts you in contact with every other investor in town - lots of future deals could flow from this.