All Forum Posts by: Cole Hagen

@Max Householder Its exciting to see a good thread from the STL area when majority of BP is Dallas, Denver, and other superstar cities....Anyway, do you or anyone else that is reading have any experience on the IL side? I grew up in edwardsville and am getting ready to purchase my first house hack SFH but would like to acquire 1-2 SFH or small MFH per year in the next 5-10 years using the BRRRR method. Just wanted to get peoples opinions on areas such as Edwardsville, Bethalto, Wood River, Alton, Collinsville, Granite City, etc. as these are very local to me.

Dustin,

I think a lot of the points that you bring up are caused from the stereotypical "millennial mindset"and their lack of work and lack of financial intelligence. I am currently 22 years old and have not made riches in real estate but do consider my self in a much stronger personal financial position  than the majority of my peers. This is due to the fact that I started working when I was 15 (mowing yards) which allowed me to purchase my own vehicle and begin my savings career. From here I worked all through high school and college in order to fund college. Because I lived at home and went to a local junior college for my first two years and then moved to a local (in-state tuition) university, I have escaped college with a engineering degree debt free with a career that pays an above average salary. 

I am currently in a strong enough position to ACTUALLY purchase a property and I completely agree with you that this is abnormal for 22. I see too many of my friends spending thousands of dollars on out of state tuition, room and board, and all the excessive costs including bars, eating out, greek life, etc.. The costs are exponential when compared to affordable junior college and in state tuition and worst of all, a lot of these people that attend these schools HAVE NO INCOME or HAVE HARDLY WORKED either because their parents fund it or they are taking out loans. 

I think that these poor financial decisions can be traced back to two things: 1. Our education system 2. Parents

Throughout 17 years of schooling (K-College), I have had one course on personal finance; consumers education in high school.  This class was worthless and the most that I learned was how to write and cash checks which I already had a great understanding of from my mowing business. My entire education career was from the top public school in my area and I find it hard to imagine that many others experienced better financial education. Our current education system does an absolute horrible job in teaching kids the power of debt, interest, and personal financial intelligence. 

Luckily, I realized this in high-school and forced myself to self educate myself on these topics through books like rich dad poor dad, financial intelligence, and many accredited websites. This is the main reason why I am so passionate about this subject because I see everyday how inadequate the majority of  millennials are in their financial intelligence and personal financial positions. I really wish our education would adopt the mindset of teaching personal finance because although our schools are setting kids up to be doctors, engineers, lawyers, etc, they are also setting them up for an uphill battle at a large disadvantage by limiting their financial  intelligence which allows them to make the poor decisions above. 

Thanks everyone for the great advice. I like the idea of mitigating the risk of taxes by investing half in the roth and half in traditional @Kevin Nguyen. I fully plan to max the 401k out and have for a while but wanted to get others opinions. The early withdraw penalty of 10% isn't too bad if I factor that into my "freedom number" and if I wanted to retire earlier than 59 1/2 to pursue more advantageous  ventures then I can. I still fully plan to save as much as possible and invest in buy and holds. I am currently on the market for my first home to house hack. I am hoping that by doing this it will allow me to save enough to snowball into 1 per year for the near future (5-10 years). Depending on how this time period goes, my strategy may change. 

I am also very interested in the many ways of borrowing from retirement funds in order to invest in real estate and the strategies for minimizing tax loss when early withdrawing if anyone has any options on this? 

Thanks everyone for the input. @Alexander Felice & @Scott Radetich yes it is 100% up to the max contribution the government allows (18k). So for each year if I put in 18k they will match 18k. I was caught off guard when I learned about this match and I took this position partly based on this match (among other reasons) as I could have made 5-10k more per year on my salary elsewhere, I did not know of many other companies that offer a plan like this. 

@Adam Anstatt you make a great point and is one reason why I am debating on putting my 18k into a roth 401k and then the match will be put into a traditional 401k. This way, at least my portion will be tax safe in the distant future if taxes were to get to 50/50 or even worse.

I just finished Scott Trench's book "Set for Life" and let me start by saying it is a awesome read and I fully recommend it to anyone and everyone.

In the book Scott bashes on typical retirement plans such as roth IRAs, 401k plans, and etc. and considers them a foolish investment that majority of Americans fall victim to every day. (he does dive into this idea more in the appendix about to take advantage of retirement plans properly and does not bash them completely but this is not the point of this post). 

I want to give two scenarios and get the opinions of others about which way is more effective at reaching financial independence. 

1.) For example, I am 22 years old with a college degree and an above average income of 55k a year (very similar to the income range Scott references in his book). Unlike many of my peers, I worked through college, lived at home, and currently have no debt to my name. My company offers a 100% 401k match that can either be a traditional or roth. The only thing is that if you choose roth 401k then the match will be put into a separate traditional 401k. With the max individual 401k contribution at $18k/year, I could potential put in 18k/yr and match 18k/yr from the company combining to a total savings of 36k/yr. 

I have learned that 401Ks throughout history have returned 8-10% (obviously with some variance and this post isn't to argue this return). From a simple spread sheet and figuring a 8% annual return on a 36k annuity, I would have roughly 773k in 13years which would return 54k per year and would be "financially independent" based on my current salary as this would yield $61,900/yr in interest minus the 10% early withdrawal penalty.

The downfall with this approach is that if I max this plan out then my take home pay is largely cut and hurts my ability to save and invest in real estate (which is my ultimate goal)

2.) Do not contribute to the 401k plan and save 15-20k per year to purchase buy and hold rental properties?

*I am stuck between these two because I understand all of the upsides of real estate investing but I see and immediate 100% return on my 18k/year "investment" with the 401k not including the 8-10% return the market could bring. I would love to hear peoples opinions on these approaches as my plan will start in 2018. I would also love to hear Scott's opinion on this (so fingers crossed that he reads this) as I am a full believer that people in general and especially millennials like myself are very under-educated in the subject of personal finance. 

I too just stumbled upon this post but would be interested in attending, networking, and learning from others in our market.

Hi, I am wanting to buy my first home this year to house hack and want to hear people's ideas on funding. I am 22, will graduate in December and have a pretty good job lined up that I have been working the past two years. I will have roughly 10k to put down, no debt, and a good credit score. I was originally looking cheaper but have recently found a quality deal that I am very interested in at 230k. I wasn't planning on it originally but am now considering going the FHA route? Please let me know if anyone has any suggestions! Cole

Hello everyone, I am brand new to BP and have been listening to podcasts for a couple weeks now. I am 22 years old and will be graduating college in December this year and plan to work for the same company that I have been with the last two years. Because I have lived at home and have gathered 0 debt I am wanting to buy a house in the next couple months in which I and  two of my friends will live in. I am doing this first because I am ready to move out and secondly because I have always been extremely interested in Real Estate Investing and want to use this property to jump start my portfolio. I am looking for any tips that anyone has for me on:

1. Funding tips (I will have roughly $10,000 to put down, with good credit) and the homes in my area that I am looking at range anywhere from 80,000-250,00. I am concerned about mortgaging too much because I have learned the drastic effective of interest on this sum of money and it hurts my stomach to think I could possible pay 2-3 times the principal on my loan. Is their anyway for me to avoid PMI at 10% or less down and does anyone have any tips on getting a decent loan with 10% or less down, I have only heard negative things about FHA as again the long term effective of paying interest.

2. Payment tips. As their are my friends (both graduating and will have full time jobs, not your typical college party house..), does anyone have any ideas of setting up payment process to ensure that I get paid every month without constantly bugging them at the beginning or end of each month?

I know this is a lot of information but I wanted to give you guys a good description of my scenerio. I am sure I will think of more questions but the funding part is the biggest one right now. Thanks!