Could a savvy 21-22yo with $50,000 invest successfully?

[Eva Arnold]

Hello everyone,

A young person could join the military right out of high school and save up $50,000 during a four-year hitch.

Assuming that young person did a lot of self-study on real estate during his or her military service, could this person get out as a 21-22yo and use that $50,000 to invest successfully in real estate, such that maybe in 10 years or so that person could achieve financial freedom? If so, what are some general thoughts on the path such a person would take?

Thanks so much in advance for your replies. I am an Army veteran and wish I'd been smart about finances; one of my friends saved $100,000 during a five-year enlistment. 

I'm working on a little book urging young people to consider other options besides going to college straight out of high school and racking up student loan debt.

I don't have much to offer in return but I am a licensed CPA and could try to answer any basic tax questions you have. 

Very Respectfully,

Eva

[Eva Arnold]

@Timothy Colman

Timothy's question: Thanks for asking this question! I am active duty myself and some ponder my possibilities. Not to steal your thunder here, but I have a tax question for you :) Here is the scenario: active duty, owns townhouse in NC that is being rented. Stationed in Japan. This past year I paid state tax on my rental 'income' as well as federal tax on the 'income'. However I still have to turn around and pay the mortgage with the 'income'!!! Is this right?

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Hi Timothy, maybe you could turn around your thinking. Think of it this way: regular employees have to commute to work, buy work clothes, and usually incur miscellaneous expenses in order to earn income. The money they spend on commuting or business clothes to wear to work or virtually all sundry expenses has to come out their pocket after it's been taxed. Furthermore, from the income they earn that they didn't spend on commuting/clothes/misc., after that's been taxed by the government, they have to provide for their housing and basic sustenance. 

Let's contrast that with you: in order to earn income on your rental property, you must pay expenses on it, including state taxes and mortgage payments -- but the money you spend on those expenses you incur does not get taxed. Of course, any rental income you have left after that does get hit with Federal income tax, but not with the FICA / Medicare taxes the ordinary wages of our poor hardworking employee are subject to.

Furthermore, as a member of the military you get BAH and BAS (housing and food allowances) and you do not get taxed on that money, and you still get to claim the standard deduction on your taxes.

I hope those facts help you get into a more positive mindset about your rental. You are very smart for investing in yourself while in the military. I wish you all success as being an absentee landlord sounds a little scary to me, but then again I know several military "lifers" who own rental property and they seem to do very well with it.

Please let me know how else I can help.

Very Respectfully,

Eva