It’s 2016 and still a great time to invest in Real Estate especially since mortgage interest rates are still historically low and there’s a big demand for rental properties in the Central Valley and across the United States. If you’ve been thinking about investing in Real Estate but haven’t started yet because, you’re young, this article will provide you with practical tips for getting started.
How to Start Investing In Real Estate at a Young Age
Obviously, your first investment is going to depend on your situation. However, I believe for most people your first investment (besides investing in yourself through reading a TON of books, blogs, and forums) should be your primary residence. 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 thousand, 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 (which I’ll discuss next.)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. Additionally, if you buy with a fixed rate mortgage (which you should) your payment will stay fixed for as long as it takes.
- Buy a Small Multifamily: As most of the BiggerPockets community probably knows by now, I’m a HUGE fan of multifamily properties. The second property I bought was an ugly little duplex (well, two houses on one lot) that my wife and I lived in for a year, while renting the other half out. This enabled us to live rent-free, and enabled me to quit my job and get into investing full-time. You can read more about this property in my article, “How I Accidentally Bought Two of Kurt Cobain’s Former Homes and Why That’s Not Even The Best Part.”By living in a small multifamily property – you are able to decrease your expenses, while locking in the super-low rates that are available to owner-occupants today. When you move out – that low fixed payment stays the same and that property will become the first in your collection of real estate investments. Additionally, the experience in landlording you’ll gain living in a small multifamily property will help you for the rest of your real estate investing career. It truly is a great first step.
Source – Bigger Pockets
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