Hello Bigger Pockets, I am an 18 year old still in high school looking to get straight into the game of Real Estate after I graduate. I have read a few books of real estate investing by Ken McElroy and have read other books for financial literacy. I am looking for a mentor I could contact with to work for and gain experience in Real Estate Investing. My current plans are to get at least one property by the end of the year. I know it might be difficult to start knowing I don't have much experience and I currently can't even check my own credit score. Just looking to put the question out there of what is the best thing I can do for real estate investing coming straight out of high school. I know house hacking seems the most appealing for my current situation but I'm open to any other options and willing to put the work for it. I've been currently on the journey of learning and learning, but now I'm looking for the best journey for action and action so open to any suggestions on what I should start with. Thank you for reading. (Will be reading Brandon Turner's Multi-Family book and also other BP Real Estate Investing books) #WAGMI
Investor · Lakeland, FL · Member since 2017 · 1k+ posts · 1k+ votes
4y
I would say start by learning the rules of the road… not much different than learning to drive…
Currently you are studying (bigger pockets if nothing else…. It’s an amazing resource!)
Getting into this business seldom comes free… so you are going to need money if you are taking the straight forward approach of buying a property. Determine how you are going to accomplish that. If you house hack you will probably need at least 3-5% for a down payment - PLUS the income that it takes to afford to repay the loan on the house (ie. the bank wants to make sure you can repay your loan). To that end, banks want your mortgage to be no more than about 30-40% of your income… and you probably won’t be able to count potential rental income to offset that at first. So quickly you will see these roadblocks to your success… you need funds, and income. Suddenly it will seem you need a good paying job… which does help… and may need to be a part of a longer term strategy. It’s cool to say, “I want my first car to be a Porsche, or something even more expensive”. Real estate to the novice can be the same… “I want to make all this money in real estate!” The truth of the matter is that it is typically a slow growth process… mostly limited by your resources. The typical rental you buy may net your $300-500 a month… so $3,600 to $6,000 a year. Not that exciting…. Unless your own say 10 of them… then it’s a potential $72,000 a year income with not a huge amount of work… but work is still involved… the idea that real estate is passive is way oversold if you want to keep most of your profit.
If straight up buying a rental you need 20-25% down. We don’t know your resources, but presuming the second is a tall order for most 18 year olds I would say that your best bet is to partner with someone that you know and trusts you (with their money). This most likely would be a relative or family member. They probably have the income, or maybe even the free cash to bankroll you? You just need to prove to them that you are worth the risk.
If I had to try and craft your “pitch” to them it would probably be to show them the return on investment that a rental makes - which will far outpace any type of safe investments they have their money in and maybe you split the profit? They will still come out way ahead! put their name right on the deed so they know there is a real asset securing their money. You need to take them on your journey… make sure your first deal is a winner. Once they see you are for real, a second house will be a much easier proposition. For instance, if you buy a $100,000 house with $25,000 down that generates $500 a month after all expenses and a maintenance reserve, that is a $6,000 return on a $25,000 investments or 24% return on your investment. In addition, hopefully your house is appreciating in value, AND your tenant is paying down your mortgage. The appreciation alone can give you a far greater return than the cash your tenant nets you. Some of our properties have double and tripled in value in 3-4 years. That’s where it can really get cool to own real estate!
Flips are another option, but you really need to understand a lot before you go there. There is potentially a lot of money in flips - we’ve done 4 so far and made handsome 5 and 6 figure profits, but just staring out, you can also really get screwed - not knowing what to look for and to avoid! You might want to partner with someone experienced in flips before attempting that!
We went to a “Wealth Builders” seminar… a traveling “here’s how to make money in real estate” seminar. What was cool about this was it gave you a lot of solid information on how the whole real estate field works. It was like $180 for a 3 day seminar for 2 people. Take “your person” with you to something like that and it will help them understand that there is more behind your real estate interest than just good will.., it’s a legitimate strategy to make money. With that said… one word of caution on most seminars out there… they are mostly there to get you to buy into their system / program / club / whatever… sometimes to the tune of 10’s of thousands of dollars. As tempting as it may be… my 2 cents is to resist that part at all costs if it is expensive. Yes, you are pumped to learn, but just like the scammers who call us on the phone daily, keep your wits about you and use your money wisely! Take what you learn, add it to your knowledge you get from bigger pockets and use self-available resources (like the forums, local real estate investors, etc) to hone your approach since your are just getting started. Don’t spend thousands of dollars you don’t have to be a part of someone’s “club”. Most of what you need to know can be learned for free right on this website. Lots of people package up that information and make it sparkle in books, dvd’s and lots of other fancy offerings. Don’t get taken in by all the polish they put on their offers unless it really fits your needs, AND budget.
Investor · Lakeland, FL · Member since 2017 · 1k+ posts · 1k+ votes
4y
I would say start by learning the rules of the road… not much different than learning to drive…
Currently you are studying (bigger pockets if nothing else…. It’s an amazing resource!)
Getting into this business seldom comes free… so you are going to need money if you are taking the straight forward approach of buying a property. Determine how you are going to accomplish that. If you house hack you will probably need at least 3-5% for a down payment - PLUS the income that it takes to afford to repay the loan on the house (ie. the bank wants to make sure you can repay your loan). To that end, banks want your mortgage to be no more than about 30-40% of your income… and you probably won’t be able to count potential rental income to offset that at first. So quickly you will see these roadblocks to your success… you need funds, and income. Suddenly it will seem you need a good paying job… which does help… and may need to be a part of a longer term strategy. It’s cool to say, “I want my first car to be a Porsche, or something even more expensive”. Real estate to the novice can be the same… “I want to make all this money in real estate!” The truth of the matter is that it is typically a slow growth process… mostly limited by your resources. The typical rental you buy may net your $300-500 a month… so $3,600 to $6,000 a year. Not that exciting…. Unless your own say 10 of them… then it’s a potential $72,000 a year income with not a huge amount of work… but work is still involved… the idea that real estate is passive is way oversold if you want to keep most of your profit.
If straight up buying a rental you need 20-25% down. We don’t know your resources, but presuming the second is a tall order for most 18 year olds I would say that your best bet is to partner with someone that you know and trusts you (with their money). This most likely would be a relative or family member. They probably have the income, or maybe even the free cash to bankroll you? You just need to prove to them that you are worth the risk.
If I had to try and craft your “pitch” to them it would probably be to show them the return on investment that a rental makes - which will far outpace any type of safe investments they have their money in and maybe you split the profit? They will still come out way ahead! put their name right on the deed so they know there is a real asset securing their money. You need to take them on your journey… make sure your first deal is a winner. Once they see you are for real, a second house will be a much easier proposition. For instance, if you buy a $100,000 house with $25,000 down that generates $500 a month after all expenses and a maintenance reserve, that is a $6,000 return on a $25,000 investments or 24% return on your investment. In addition, hopefully your house is appreciating in value, AND your tenant is paying down your mortgage. The appreciation alone can give you a far greater return than the cash your tenant nets you. Some of our properties have double and tripled in value in 3-4 years. That’s where it can really get cool to own real estate!
Flips are another option, but you really need to understand a lot before you go there. There is potentially a lot of money in flips - we’ve done 4 so far and made handsome 5 and 6 figure profits, but just staring out, you can also really get screwed - not knowing what to look for and to avoid! You might want to partner with someone experienced in flips before attempting that!
We went to a “Wealth Builders” seminar… a traveling “here’s how to make money in real estate” seminar. What was cool about this was it gave you a lot of solid information on how the whole real estate field works. It was like $180 for a 3 day seminar for 2 people. Take “your person” with you to something like that and it will help them understand that there is more behind your real estate interest than just good will.., it’s a legitimate strategy to make money. With that said… one word of caution on most seminars out there… they are mostly there to get you to buy into their system / program / club / whatever… sometimes to the tune of 10’s of thousands of dollars. As tempting as it may be… my 2 cents is to resist that part at all costs if it is expensive. Yes, you are pumped to learn, but just like the scammers who call us on the phone daily, keep your wits about you and use your money wisely! Take what you learn, add it to your knowledge you get from bigger pockets and use self-available resources (like the forums, local real estate investors, etc) to hone your approach since your are just getting started. Don’t spend thousands of dollars you don’t have to be a part of someone’s “club”. Most of what you need to know can be learned for free right on this website. Lots of people package up that information and make it sparkle in books, dvd’s and lots of other fancy offerings. Don’t get taken in by all the polish they put on their offers unless it really fits your needs, AND budget.
Real Estate Agent · Dallas/Fort Worth, TX · Member since 2019 · 78 posts · 35 votes
4y
Randall hit just about everything. One thing I'd reiterate is although there are plenty of no-low money down buying strategies, you will absolutely need to have money in the bank for marketing, reserves, repairs, escrow, so on and so on. You sound hungry, so I would fuel that fire during the day by finding work in the industry or offer hustle value to an investing mentor, then bar tend / wait tables at night to stack cash.
In addition, eliminate the housing expense ASAP. If you don't have a housing expense yet, keep it that way as long as you can and save lol. If you can't get your hands on a property purchase, rent a place and airbnb bedrooms or split rent with buddies.
Hello Bigger Pockets, I am an 18 year old still in high school looking to get straight into the game of Real Estate after I graduate. I have read a few books of real estate investing by Ken McElroy and have read other books for financial literacy. I am looking for a mentor I could contact with to work for and gain experience in Real Estate Investing. My current plans are to get at least one property by the end of the year. I know it might be difficult to start knowing I don't have much experience and I currently can't even check my own credit score. Just looking to put the question out there of what is the best thing I can do for real estate investing coming straight out of high school. I know house hacking seems the most appealing for my current situation but I'm open to any other options and willing to put the work for it. I've been currently on the journey of learning and learning, but now I'm looking for the best journey for action and action so open to any suggestions on what I should start with. Thank you for reading. (Will be reading Brandon Turner's Multi-Family book and also other BP Real Estate Investing books) #WAGMI
It is AWESOME that at your age you are already this far ahead. Most of us spent years after school trying to figure life out before finally finding real estate. The books you are ready is a great foundation to build as well as the great advice from the posts above. Brandons Volume 1 will get you excited and Volume 2 will show you what lies in front of you for the future (great goal setting).
You are going to get a ton of advice and opinions (just like this one). My advice, take it all in just like data, but use your gut to make your own decisions. Of course, over time your gut gets better and better with experience. Enjoy the ride. Kick ***, and dont let any No's, failure, or let downs get in your way.
Keep reaching out to the community as people love to help here. It is amazing.