I’m a 26 year old recent college grad… and I want to get into investing in real estate. I feel like I want to look into properties now that the market is down, I’m thinking it can only go up in the next 10 years?
Anyways… my question is, what is the best way to get into it? I’ve got 15k saved up ready to use for a property. I’ve seen a lot of ads online for big investors who want guys to do alot of the legwork/bird dogging for them, on commission of course. Is this a good way to be taught about the business? Do I become an Agent? Find a mentor?
I’ve read all the Kiosaki books there are and thought there are probably some investors here on ST, so I wanted some friendly opinions. Maybe tell me how you got going in real estate?
A potential plan would be to become a California Highway Patrol Officer… make 80k a year working 3 or 4 days a week with days off to work in Real Estate.
My dream would be to have some properties as rentals with positive cash flow… flipping some rentals here and there… then eventually get into commercial real estate and have cash flow coming at me from all over the place.
I currently have one 5 unit building, I’m coming down from 5 buildings/15 units. It sounds great, but there are a lot of headaches. I have been doing to for about 10 years. If I was just starting out I would look into buying a duplex and renting half of it out. That will give you an idea on how everything works. You would think that with increased lending standards more people would be renting. Many homeowners are having trouble selling, so they are renting out their houses. This floods the market and lowers rent.
The lending standards have gotten pretty strict. Having it be owner occupied should help some. I started with a single family house. The lady next door to my parents died and they did not want the hassle of putting it on the market.
You are off to a good start and I definitely like your attitude. The first thing you should do is get a job. Otherwise your lending prospects are really limited and leverage is the way you are going to have to do it unless a rich relative dies in the near future and leaves you some cash. Another reason you need a job is for when you are between tenants you are going to need the means to make the stroke without a tenant. Also repairs are going to come up so you are going to need an alternate income to fund repairs while you are getting started.
Is the CHP hiring right now? I heard they are not.
Edit: David, I don’t know what you studied in college, but you might also want to take a look at getting your real estate sales agent or brokers license. The license can get you into some doors and save some money when acquiring or selling.
RE didn’t hit bottom yet. And if you look at a current cash flow for rental income you are setting yourself up for major failure, just like most people that currently invest based on P/E. As long as people invest based on current and past earnings they will fail. How many properties, especially rentals, can you find that are cash positive in a situation where rental income would drop 20-30% from current rates in the not to distant future?
My advice to you is to be very careful when taking advice from RE professionals, especially those that have something to gain from you and your decision that might be influenced by their input. Most RE people are no different than used car salesmen. They predict bottom here but couldn’t see the top; it’s always good to be buying (or selling…or refinancing).
RE didn’t hit bottom yet. And if you look at a current cash flow for rental income you are setting yourself up for major failure, just like most people that currently invest based on P/E. As long as people invest based on current and past earnings they will fail. How many properties, especially rentals, can you find that are cash positive in a situation where rental income would drop 20-30% from current rates in the not to distant future?
My advice to you is to be very careful when taking advice from RE professionals, especially those that have something to gain from you and your decision that might be influenced by their input. Most RE people are no different than used car salesmen. They predict bottom here but couldn’t see the top; it’s always good to be buying (or selling…or refinancing).
Excellent points. My rents are down now compared to where they were 5 years ago. RE professionals always told me that investment property was the way to go, because real estate only goes up.
It’ll come back again - eventually, but I’d guess real estate will be down for quite awhile before it begins to rebound. I owned commercial real estate in the last recession and was more than happy to unload it. At least I broke even which is more than some other folks did.
For the OP, I’ll second the idea of first getting a duplex and rent one side out. Start small. I’ve seen people build up “house of cards” real estate empires with little money down only to have the whole thing crash.
I like small commercial over residential. I’ll take the typical commercial tenant anyday over the multitude of dirtbags that rent residential properties. Less paperwork to buy them. Get the tenants to mostly pay for them and blammo after 15 years you own them.
I’d agree with you Tim, but in the last recession I had office space sitting empty with a “for rent” sign on it for several months after the computer business that was renting declared bancruptcy. Eventually I had to convert it to a residential apartment. The only reason I suggest a duplex to start is because you’re right next to the tennant and can keep an eye on a bit easier.
I’m guessing the bottom of the market is going to be coming up in the next 1-3 years or so… so I was thinking that I should start thinking about this type of thing now. Weren’t fortunes made during recessions… for the people who still had money to use?
I just figure since I’m young with no major financial obligations, it would be a good idea to start grabbing as much as I can while its all so cheap. And by “as much as I can”, I mean, probably 1 or 2 properties in the next 5 or 6 years…?
Getting a license was a question I had, so thanks for the input. Anyone have any other thoughts on how to get started?
Going along with the OP I am getting into my first duplex this year. It will be my first property and I will be living in one unit. Should I be looking into setting up a LLC for the property or that not needed as long as I am in the property? I would rather be safe than sorry living in our litigious society.