How to start investing in real estate at a young age (or a “young at heart ageâ€)
I don’t want to get old. I’m not looking forward to hip problems, my eyes getting worse or needing to take my pills just to use the bathroom correctly. I don’t want the “old person†smell, the frequent heartburn, or the desire to drive fifteen miles under the speed limit. The thought of that life terrifies me. Perhaps, though, the thing i’m looking forward to least is no longer being the “whiz kid.†because i started investing so young, i’ve always been the one in my social circles who “is going somewhere.†it’s a good feeling, but it’s not that i’ve done anything remarkable, really. It’s that i’ve done something remarkable for my age. There is a significant distinction there, but an important one. It means, when i get old, i’m not longer doing remarkable things. I’m just doing my job. Why investing at a young age rocks … and is hard
At 27, i still have a few good years left to be “remarkable†– but “old†is creeping up; but it’s not just me either, because here is a dark secret: you are getting old too. So, i’ve dedicated the last year of my life to teaching other young folks (and young at heart) how to get into real estate investing, despite some of the disadvantages we have. In fact, let’s talk about those disadvantages real quick: - very little money – let’s face it – most young people are pretty broke. Maybe you’ve got a good job and have so much disposable income you don’t know what to do with it, but chances are – you’re living pretty close to paycheck-to-paycheck.
very little life experience – i know, when i was twenty-one i thought i knew quite a bit. I didn’t. I didn’t know anything. Now today, at 27, i think i know everything. I don’t.
video games are so appealing – let’s face it – sometimes all we want to do is play some video games, hang out on facebook, and watch tv.
chasing girls (or guys) or chasing kids – from the moment we hit 20, boys and girls of the young persuasion have a strong need to find that “special someone†and spend all their time together. After that, comes the kids that require every waking minute. That doesn’t leave a lot of time for investing.
no like-minded social group – i don’t have many friends who read my writing. It’s not that they don’t like me, or care about me, it’s that they simply don’t care about real estate – and that’s perfectly fine. I’m not bitter. You will probably find a similar situation. It makes it tough, however, to find motivation to get into real estate when you don’t have a community that fosters financial education and growth.
So what’s a person to do, faced with all these disadvantages? I’m hoping to help offer some insight on that, being one who has been through it. The following is a collection of the lessons i have learned. To start investing in real estate, harness what you’ve got
Now that i’ve made you feel bad about all the things that are not going so well in your life, let’s talk about the things that you do have. Motivation- you’ve already read 600 words of this post about real estate investing, so you are clearly motivated. Use that. The older you get, it seems, and the less motivated you are. As people get older, they seem to get more complacent in their situation, and no longer shoot for the stars. Today i had a conversation with a man about how to buy an airplane. Am i anywhere near ready to buy an airplane? Heck no. But i’ve got goals, and i’ve got ambition – and i’m going to buy an airplane, even if it takes me the next ten years of working that plan. This is the power of motivation when you are young. Technology- you’ve got a firm grasp on how the internet works, how to handle social media, how to use a smart phone, and how to make a spreadsheet. Use this.
Time- finally, you’ve got the most powerful force in the universe: time. You aren’t looking at forced retirement in five years. You’ve got the next twenty or thirty years to crush it. If you create a solid plan now, and simply follow that plan, you are going to have to work hard not to retire a millionaire.
Your first investment Obviously, your first investment is going to depend on your situation. As i see it, there are two great options you have. When starting out, i did both of these:
- Live-in flip: my very first home was an ugly, single level house i bought before i knew what real estate investing was. All i knew was that it was the cheapest house around, and i could get into it with almost nothing down (just a few hundred thousands, that i spent a few months scraping up.) i then spent the next several months painting, adding new flooring, and doing many more improvements on it – finally selling the property for a nice profit, which paid for my wedding and the down payment on my next property
The beauty of the “live in flip†is that since you have to pay to live somewhere anyways, there are effectively no “holding costs†on the flip. You could take three months or three years to sell it – but in the end, you’ll profit.
- Buy a commercial property: buy an apartment, a shop or an office in any commercial area, if you are not going to start your own business there, you can rent it out easily. This will enable you to earn some rent so that you can quit your job and get into investing full-time. Start building relationships I’m going to tell you a secret: old people like ambitious young people. There is something truly rewarding about helping an ambitious young person achieve their goals. I think a lot of it has to do with “i see myself in their shoes†or “if only i had started back then!†Whatever the reason, it is a fascinating and powerful phenomenon. Use this to your advantage! Begin to build relationships with the older investors who have come before you and graduated from the school of hard knocks. Let their failures teach you to avoid (or fix) your own. There are two great places that you can start building these relationships today: locally and online.
-locally, there are probably dozens (if not hundreds) of old-time landlords and real estate investors in your area who may take you under their wing to help mentor and train you. These relationships are often simply a friendship, built over many cups of coffee and errands run for the investor.
-online, these relationships are built everyday on different online real estate forums, where investors from across the country get together to help answer questions, build relationships, make deals, and improve the lives of everyone involved.
Where do i go next? Time is ticking. You are getting old, fast. You aren’t going to be the “whiz kid†for long, so it’s time to start. Evaluate where you are, where you want to be, and the path you need to get there. Connect with the people who knows the market, ask them, take their advice!
What are you waiting for? Another round of modern warfare iii? Another facebook picture of a cat? What are your struggles when getting started? Or, if you are “old†already – what’s your advice for the younger ones? Leave your comments below and let’s chat!