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Hello,
My fiance and I just graduated college and both have great jobs in southern Cal. We are renting a condo right now. In a few yrs I'd like to buy a house or condo.
Eventually, I want to own a few properties to rent out and make a 2nd, 3rd, or even 4th income. Any advice for a young guy like me?
I bought my first home at 23, 2nd home at 25, 3rd home at 28, sold my 2nd at 28 for a tidy profit, moved into my wife's home and leased out 1 and 3. I'll be 29 in a week of two.
It's not an easy way to make money but it is awfully fun. My thinking was I'd rather take a big, albeit calculated risk while young so if it did go awry, it would only really affect myself. Just depends on your propensity for risk, aversion to keeping cash and how well you can deal with people.
I would buy RIGHT NOW, not in a few years - you will miss the window! This is is the best time in 40 years to buy real estate. I would do one of two things. Either buy a duplex or if you can swing it a 4 plex and live in one unit - for now - in a few years your RE holdings will pay for your dream home!
Let your tenants pay for your mortgage and save your money and as soon as you can afford a second property buy it, rinse and repeat. Get 20 units and you will be well on your way to independence.
You don't say where in SoCal you are, but don't buy in rent control areas no matter what! But as close to the beach as you can afford, the weather is better and values do better. At the least buy a SFH where you can rent out a bedroom suite with a separate entrance - but don't count that income against your mortgage, save it for your next rental.
Eventually, I want to own a few properties to rent out and make a 2nd, 3rd, or even 4th income.
IF (and it's adam big IF) you personally have the skills and tools to do most of the work needed to remodel and repair an older "bargain priced" home then take advantage of the time you have now
(before kids) that you won't have again until they're in high school.
OTOH... if you don't have the skills and tools to do most of the work needed to remodel and
repair an older "bargain priced" home then invest your time and money where you DO have skills.
As to buying for personal use right now? That's more about how secure and sure you are that
you'll be (and want to be) employed and live where you are now for at least five years.
Mostly it's how the company feels about you.
The So Cal RE market is far too expensive to get into to not be sure beforehand.
One way is to buy a ready to live in (minor changes updates OK..but not major) place at a reasonable price and live there as your outlook, market, job security, marital situation, etc. changes. If still comfortable then the next step would be to rent it and buy on up to a nicer place then repeat, repeat.
At 23, do this every 5 years, at 43 you will be living in a nice home plus owning/renting out 3-4 maybe lesser ones.
I would buy RIGHT NOW, not in a few years - you will miss the window! This is is the best time in 40 years to buy real estate. I would do one of two things. Either buy a duplex or if you can swing it a 4 plex and live in one unit - for now - in a few years your RE holdings will pay for your dream home!
Let your tenants pay for your mortgage and save your money and as soon as you can afford a second property buy it, rinse and repeat. Get 20 units and you will be well on your way to independence.
You don't say where in SoCal you are, but don't buy in rent control areas no matter what! But as close to the beach as you can afford, the weather is better and values do better. At the least buy a SFH where you can rent out a bedroom suite with a separate entrance - but don't count that income against your mortgage, save it for your next rental.
I 2nd this... Buy a 4 plex on a 15 year fixed loan..
You can get an investor 15 year mortgage rate at around 3.5 to 4.0 right now...Within 3 or 4 years you will have a lot of equity built into this property. Try to pay this mortgage off as soon as possible it should be doable within 5 to 7 years. After this you are financially setup for life as long as you don't incur any stupid taxes, as this property will cover your note on a single family mini-mansion for the next 15 years while you raise your kids. Once your house is paid off you can use this and the money saved from your single family house to pay cash for college.
I would buy RIGHT NOW, not in a few years - you will miss the window! This is is the best time in 40 years to buy real estate. I would do one of two things. Either buy a duplex or if you can swing it a 4 plex and live in one unit - for now - in a few years your RE holdings will pay for your dream home!
Let your tenants pay for your mortgage and save your money and as soon as you can afford a second property buy it, rinse and repeat. Get 20 units and you will be well on your way to independence.
You don't say where in SoCal you are, but don't buy in rent control areas no matter what! But as close to the beach as you can afford, the weather is better and values do better. At the least buy a SFH where you can rent out a bedroom suite with a separate entrance - but don't count that income against your mortgage, save it for your next rental.
I disagree, there is no rush to buy or you will miss the window. The best time to buy in 40 years is highly dependent on the area of socal. Some areas in socal have barely dropped at all from bubble pricing. For much of socal, the rents won't cover the mortgage plus taxes/insurance/maintenance. It's just not as easy as 1) buy duplex 2) constant tenants paying for your mortgage and 3) dream home. There are a lot of factors to consider, many areas are still depreciating, and there are a lot of factors that could push down prices even more.
MAD above has a point. I forgot we were talking about SoCal. Other than my residence my rentals are out of state. So option 2 - buy a 4 plex anywhere BUT SoCal and use the income to pay for your house here? Internet advice is worth what you pay for it. Good luck whatever you do, and learn before you leap!
I disagree, there is no rush to buy or you will miss the window.
Maybe, maybe not. If prices start to go up as they are in some places it could make a difference. If the interest rates start to go up it could make a big difference.
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Good luck whatever you do, and learn before you leap!
