Congratulations! You’ve graduated college or technical school and have realized that the job of today is not who you are. It’s no longer the thing that identifies people throughout their lifetimes. It rarely holds the promise of job security into the later years nor has a pension. You have realized that you must rely on your investments to take you into retirement. You just need to get started.
If this isn’t the right level for you, here’s the other posts in this series:
- How to Start Real Estate Investing as a Teenager
- How to Start Real Estate Investing as a College Student
- How to Start Real Estate Investing as a Young Professional (this post)
How to Invest as a Young Professional
- Finances. Make sure your financial situation is in order. You’ve made it this far, so it should be. Pay off credit cards and don’t keep any balances. Decrease expenses. You should know this stuff by now.
- Plan for Independence. Start to become financially independent from your family now wherever possible. Spend your own money so you know how that affects you. It is a benefit to you to stay on their insurance or even live in their house, but it will be a shock when you go out on your own, so start planning for it now.
- Cultivate Relationships. You likely won’t have much cash on hand for a down payment. You should be working toward that. In the meantime, go to meetups and build a network of like-minded individuals, who know more than you, but are probably happy to give you advice when you need it.
- Learn How to and Begin Evaluating Deals. This isn’t full underwriting, but a basic running of the numbers to start the proper mindset. Many books will help you. I always recommend The Millionaire Real Estate Investor by Keller and Papasan. Start evaluating actual deals that are on the market today. Look for duplexes, triplexes, and fourplexes.
- Save Money. At this point, you may not have your own family, so you can live frugally and save up to 50% of each paycheck. Yes, 50%, and that’s before taxes. Learn to pay yourself first and you’ll have that down payment in no time. Eat those cans of beans and stay off Netflix for now, so you don’t have to later. Use that extra TV time to read real estate books.
- House Hack. Once you have your down payment, purchase at least a duplex, but ideally a fourplex. You can take advantage of a 3.5% down payment FHA loan for small multifamily, living in one unit and renting out the rest. This is absolutely the best way to get started at your level.
- Build for Your Future. When house hacking, you’ll shoot to be at least cash flow neutral on your home, saving more money for the future. In a couple years, you’ll be able to move out and repeat this (subject to FHA rules – ask your banker). You can do this even a few times before moving up to commercial loans.
At this point, you should continue learning and saving money and looking for the next great deal. When you are ready, an 8 or 16 plex is a great way to move up. Best of luck getting started!
