How Can College Students Start Investing in Real Estate!

Question

Hello Everyone!

My name is Dylan Wells and I am currently a senior at the University at Albany majoring in Accounting as well as Business Administration with concentrations in Finance and Management. Upon completing my undergraduate degree I will be pursuing my Masters in Taxation in addition to sitting for the CPA examination. After graduate school, I have accepted a position to work for PricewaterhouseCoopers specifically in the area of International Taxation. Real Estate has always been something that has fascinated me ever since taking up my first job as an assistant project manager at a local roofing company called Titan Roofing. While I may not be good at swinging a hammer, the idea of being able to accumulate multiple properties to subsidize my monthly expenses and practically live for free has always been a dream of mine. I currently have $15,000 saved up right now and I am looking to make a play into the world of real estate. My question for the BiggerPockets community is how can a college student leverage their money and get into real estate without investing in REIT’s or Mortgage Notes. Any advice would be greatly appreciated!

Jon Reed · Answer

I believe the best way for a college student to start out who has just $15K to invest is to house hack.

Buy a 3 bedroom house... or duplex... and rent out all of the extra rooms or units to cover the note payment and expenses. It will also be considered your main residence so you can get an FHA loan with just 3% down.

Nate Monson · Answer

Hi @Dylan Wells! I am a real estate agent and I work across the street from the SUNY Albany. Oddly enough I did my Master's at Ualbany as well. I would love to connect with you sometime soon to chat about real estate! I'll send you a direct message as well!

Jerid Meagan · Answer

Hello @Dylan Wells,

Agree with @Jon Reed. Keep it simple. Don't try to hit a home run, just get on base. Everything will snowball from there and the experience will be invaluable tuition.

Anthony Rosa · Answer

You have 15K to start so my question would be Where do you want to purchase your first home?

Dylan Wells · Answer

Thank you everyone for contributing! From what all of you have mentioned here it seems that best way to get into real-estate given my financial position is to simply look for multi-family homes, duplexes, or even triplexes to start off with as I can potentially live in that residence as well as renting out the other bedrooms to cover the monthly rent/utilities of the property. However, considering that my internship will be located in New York City (and I will most likely be residing there for the next 3-4 years upon completing my Master's) I will not be able to purchase a home as my own personal residence. What I hope to do is that seeing as my sister and her boyfriend are looking for a new place after renting an apartment for the last year now, I saw this as not only great timing, but a way for me finally get into real estate. My father is very close to retirement as well and one of the reasons why I am considering making this move is that one, I will have a family member with stable income renting the property, my father will be able to help manage the property and take care of it while I am away, and the extra income would definitely be very useful in NYC. I know that when it comes to family you need to be careful but, I am very comfortable taking that risk.

Another piece of information that I have learned as well is that FHA loans can be very useful because I can get a loan for a property without paying an absurd down payment. I am very transparent when it comes to my finances and my credit score is very good being a 741 so hopefully securing the loan will not be too difficult. I think by having my father as a guarantor, it will my help my chances as well becuase I am still in college. Another question that came to mind is that I wonder if I could utilize my dad's credit to secure a loan for the property, put me on the deed as a joint tenant in common with right of survivorship (this could be useful in that when he passes the asset could legally flow into my possession without being subject to any taxes), and try to avoid any risk of myself not getting approved for the loan.

One last question, is there away that a ROTH IRA can invest a property that is owned by yourself? I know this is an abstract question but my logic is as follows. Say you have a property that you just purchased and you want to take advantage of the tax deductions that come with owning a rental property, but do not want to pay taxes on the rental income that you earn from said property. If the ROTH IRA owns the property, any capital gains are non-taxable because you invested in the property with post-tax dollars. If any of you are not familiar with what I am trying to do, I ma trying to pull a Mitt Romney here with his $102M IRA that is non-taxable.

Lastly, for all of you who DM'd me, I will be getting back to you shortly. My family is hosting a New Year's Party and the past couple days have been hectic preparing for it.

Theresa Harris · Answer

@Dylan Wells  As other said buying a place and renting out rooms is a great way to get started.  I know a few parents who buy a house for their kids when they go to university.  The kid rents out rooms to friends or other students and basically lives for free while his parents are making money from the rent.

David Flores · Answer

@Dylan Wells

House hacking is a great idea as mentioned here.

Most of my investments are in student rentals and I setup seller financing deals. This requires little capital and can 100% be another way how you can get involved. Student rental markets are great because the demand for rents is as high as any neighborhood in america. This keeps rental prices high and demand consistent. I do not know where you go to school but some colleges are in the middle of no where and these are the gems. For example, i have a couple places in Morgantown WV for WVU students. The home prices match the prices in WV but the rental market can be comparable to new jersey. Also in these town/cities that have student rentals and are in the middle of nowhere sellers are usually more motivated and will agree to seller finance situations. Reason for this is because it is not investor saturated and places usually sit on the market longer.

Ronan Donnelly · Answer

@Dylan Wells, congratulations on showing such initiative, I wish that I had started as early as college. Others on this post have recommended house hacking and I agree that this is probably one of the best strategies. Here are a few other ideas:

1) Partner with a local investor that needs your skills. Your accounting and finance courses make it likely that you could help with deal analysis for example

2) Start a local REI meetup. This will give you connections, access to deals and education

3) Wholesaling - go out and look for a deal. If you are unable to close on it yourself you could always wholesale it or find a money partner

4) Focus on education, especially if you can relate it to your university course. Focus on a specific niche and go deep on that. There are so many ways to succeed in real estate but better to focus on one

5) Look for an internship with a real estate CPA, this will give you experience in addition to possible connections to investors

Good luck!

Cole Beauchemin · Answer

I think @Jon Reed is right on the money there. As a fellow college student I see where you are coming from @Dylan Wells and It looks like house hacking is one of the best ways to get started for us newbies. As soon as I graduate next year I am going buy a multifamily wherever I get stationed.

Nicole Heasley Beitenman · Answer

House hacking all the way.

How Can College Students Start Investing in Real Estate!

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