Advice For College Student & FHA Loans

[Devyn Grillo]

Looking for some advice please! I'm 18 and really looking forward to starting real estate investing. I'll be headed to college next year at the University of Washington. I've been looking for an apartment to rent, but wouldn't it be smarter of me to find a duplex to live in and rent out the other unit? If so, would I qualify for an FHA loan since I'd be living in the building and then I'd have a smaller down payment? I'm not totally clear on all the qualifications needed for the loan but any ideas for my situation would be much appreciated. Thanks in advance!

[Michael Boyer]

It is a sound strategy--especially if the numbers work.... But without the traditional work history or credit history (hard to build up by 18), you may have to get a bit creative on financing. You can start looking at the requirements for loans now, though. But traditional students usually have not had the time to build the credit/work background to qualify.

Maybe see if your folks are interested in partnering up on it. For example, they own/buy; you manage and live for free; and maybe see if you can turn a profit by renting the other side and maybe one or two bedrooms in the unit you occupy. Maybe arrange to cover all the costs for them and pocket any extra.

Then you'll graduate with 4 years of property management experience and a college degree (plus save 4 years rent; maybe even cash flow positive... run some numbers, see how it works out financially and educationally...) I would guess that is your main dividend--the experience-- empowering you to buy your own multifamily in your early mid twenties....

Plus, you can see where the price is in 4 or 5 years and possibly sell if you are moving (proceeds maybe pay for college!) or keep renting if it pencils out well. Maybe you buy them out at some point in your near future. 

Best of luck.