College student wanting to invest!

[uaintsokool]

Hello All! This is going to be my first post on this forum so it may be a little long. First of I want to say PLEASE don't blow me off as a immature 21 year old wanting to get rich quick or anything like that. A little back ground info. I am a 21 year old college senior attending the University of North Texas. I plan on graduating this December with my BBA in Finance. I hope to go back within a year to get my MBA also. I am taking a real estate investments class and my professor really has be interested in wanting to invest in some real estate. I would like to know where and how I should start in investing real estate. Alot of you guys are where I want to be. I would like to have more than one source of income and I think real estate would be a good start to that. Sorry if this seems to be a stupid or not well thought out question, but right now I want to get all the advice I can. Thanks you guys!

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[mountainroads]

I was always a fan of college apartments. Something close to campus that is reasonably well taken care of. Find a well rounded student that can manage it in lieu of rent or reduced rent. Aside from a couple months in the summer when occupancy may be a bit lower, students always need housing.

I've got a good friend that owns two complexes out her in NorCal, and he has always maintained that aside from the occasional unit getting trashed, they generate a good stream of income that covers carrying costs for him. That will probably be where my wife and I head next...the land of slumlords!!

Not being familliar at all with what the market is like in Texas, this is a damn fine time to get in the game. Low interest rates, low prices, high volume fo property...

Good luck with everything!

Cheers,
Chris

[uaintsokool]

thanks for the info! lol 95 views and only 1 respond. Anyone else have anything?

[mountainroads]

Also, as a side note...I'd make it someplace that you can keep an eye on and get to readily if anything needs attention.

Cheers,
Chris

[dbusiness]

Do you currently own a condo or house?
What is your financial situation?

If I were you I would try to find a nice two bedroom condo in a decent neighborhood.
Look at the property amentities, school ratings, how close it is to the interstate, shops, areas of interest, these all play a role in how fast you can turn a property if you find a job out of state.

Then rent out the 2nd bedroom to offset the mortgage and to learn how to budget, develop your property expense spreadsheet, and learn if property management is for you. The first rule you have to understand is that depending on your location you may have better financial opportunities. Meaning I have one condo that after taxes, homeowners fees, repairs, and months that the condo is vacant and not rented that I only make $53 a month. This is my absolute worst performing property rent wise but the property values in that area are still holding strong and is the only reason I still own this property.

You will ultimately do what you want but my advice is start small and limit your initial risk. The other thing with real estate is that it is subjective and it is best to find someone who will look at the property and point out additional likes and dislikes that you didn't see or think off. There are fewer people who want to teach you and others how to get started probably because they view you as the competition and ultimately possibly taking revenue away from them. In the past 8 or 9 years I have seen more and more regular home owners getting into real estate rental game.

They along with yourself have the potential of getting financially hurt when they get greedy and spread their finances to thin or don't fully understand the market so start small.

[mountainroads]

Good points there dbusiness!

Cheers,
Chris

[dak125]

Do you want to start investing right now? If so, good luck getting financing. The only real option, IMO, is FHA. You could buy a 2-3 unit building with ~3% down. You would have to be a live-in owner, or at least claim to be.

Buying individual units, to me, is a pain. You have all the headaches involved with being a landlord of a multi-unit building without the reward. If your only tenant leaves, you're stuck paying the mortgage. If you can't rent the unit for your full principal amount, you have to cover the difference. If the door falls off the hinges, you have to fix it. If the shower head falls off and hits the tenant in the head, make sure you're insured. Annnnndd you have to worry about assessments which can really add up quick, especially "special" assessments.

I guess my point is, you have all of the risk involved in owning a multi-unit building but with fewer ways (IE more units) to spread it.

I don't see individual units as a great RE investment. If you buy a condo to live in and decide in a few years you want to live somewhere else, I could understand trying to rent it, but outside of that, it's not something I'm interested in. Managing property is a major headache.

With that said, RE is awesome. There are deals to be had right now. In Chicago (where I am), there are large amounts of small apartment buildings. They were built for live-in owners and I would recommend starting there. I'm not sure if these types of buildings are prevalent in TX though. Live in one of the units, rent out the others. Own it, refi it in a few years, pull out the cash, buy another one. DO NOT OVER LEVERAGE!!!! Rinse and repeat. Once again, DO NOT OVER LEVERAGE.