Where do I start investing in today's market?

Question

I'm currently a junior in college looking to start investing in real estate. My dad and I have money set aside that we are ready to put into the market. Our biggest problem is that we don't know where to start. We live in the southeast and would love to invest in that area! Any advice helps.

Nathan Gesner · Answer

I recommend you build a strong foundational understanding of real estate investing.

1. Start with BiggerPockets Ultimate Beginners Guide (free). It will familiarize you with the basic terminology and benefits. Then you can read a more in-depth book like The Book On Rental Property Investing by Brandon Turneror The Unofficial Guide to Real Estate Investing by Spencer Strauss.

2. Get your finances in order. Get rid of debt, build a budget, and save. The idea that you can build wealth without putting any money into it is a recipe for disaster and the sales pitch of gurus trying to steal your money. A wise investor will not try to get rich quick with shortcuts. If you can't keep control of your personal finances, you are highly unlikely to succeed in real estate investing. Check out my personal favorite, Set For Life by Scott Trench , or The Total Money Makeover by Dave Ramsey.

3. As you read these books, watch the biggerpockets podcasts. This will help clarify and reinforce what you are reading. You can hear real-world examples of how others have built their investment portfolio and (hopefully) learn to avoid their mistakes.

4. Now you need to figure out how to find deals and pay for them. Again, the BiggerPockets store has some books for this or you can learn by watching podcasts, reading blogs, and interacting on the forum. There is a handy search bar in the upper right that makes it easy to find previous discussions, blogs, podcasts, and other resources. Biggerpockets also has a calculator you can use to analyze deals and I highly recommend you start this as soon as possible, even if you are not ready to buy. If you consistently analyze properties, it will be much easier to recognize a good deal when it shows up. Find Brandon's videos on YouTube for the "four square" method of analyzing homes and practice. It doesn't take long to learn how to spot a good deal.5. Study the market. You can learn to do this on your own or get a rockstar REALTOR to lead the way. I highly recommend a well-qualified REALTOR that works with investors and knows how to best help you.

6. Jump in! Far too many get stuck in the "paralysis by analysis" stage, thinking they just don't know enough to get started. The truth is, you could read 100 books and still not know enough because certain things need to be learned through trial-and-error. You don't need to know everything to get started; you just need a foundation to build on and the rest will come through experience and then refining your education.

You can build a basic understanding of investing in 3-6 months. How long it takes to be financially ready is different for everyone. Once you're ready, create a goal (e.g. "I will buy at least one single-family home, duplex, triplex, or fourplex before the end of 2019") and then do it. Real estate investing is a pretty forgiving world and the average person can still make money even with some pretty big mistakes.

Theresa Harris · Answer

Nathan gave good advice.  The only comment I'd have to what he said is about getting rid of debt.  Avoid getting into debt, but if you do get student loans, I wouldn't worry about paying those off before investing.

Start by thinking of areas that you know either because you live there, family members do or you've spent time there.  You will have lots of options, so don't be afraid to narrow it down to a few.  Look for places where the numbers make sense for rentals (cost of owning vs rental income), there is a strong market for rentals and houses in good areas.  If you are planning on staying in the same area where you are going to college, why not buy a place there and rent out rooms to other students?  Once you are done, you can rent the entire house.

I'd start with a house or duplex.  Avoid places with HOAs.  Condos will look cheaper on paper, but the condo fees will eat into your cash flow and I'd rather pay a bit more and use that money for mortgage payments.