The College Student and Real Estate
Hi! I’m Natalie – The Inspiring Investment’s first Inspiring Intern!
Katie assigned me the task of writing about what I’ve learned so far at this company, so today, I am doing just that.
Before I came to work for Katie and Uriah I thought nothing about real estate. Purchasing my own home – or anything of the like – was seriously something I had never considered – not once. As a college student it just wasn’t on my radar, however, now I see the time to start thinking about it is now, so I can be prepared when I am ready.
The good news is that I am close friends with the Dortches. The bad news is that most of you are not.
So, if I can help you out a little by passing some of the wisdom they have passed to me then I am happy to do so.
What’s the Big Deal About Real Estate?
Most People’s Largest Investment
For starters, purchasing a home is one of the biggest investments you will ever make. Not to mention, one of the largest debts most people will carry. I mean, people are still paying mortgages when they die! That kind of debt load is heavy! Can you imagine owing anybody hundreds of thousands of dollars? As students, our education is our largest investment, unless you attend a school like Duke where the estimated cost of attendance is a whopping 72 grand a year. For you – college and your first real estate purchase may be more “apples to apples”. For the rest of us, our future real estate endeavors will be more costly, but potential gains can be endless, if done wisely. I’d say it warrants the extra effort to analyze a healthy, well-rounded view. What I believe Katie and Uriah want us to see is that every house is an investment. They want us to think like investors.
Creative Real Estate Options
I interviewed Katie and picked her brain about what I should know and how a college student can use REI (real estate investing) to make money, obtain property, and begin thinking like an entrepreneur. What she said surprised me!
- Let your roommates pay your rent – find a rental, put the lease under your name (taking on the risk and responsibility) and source roommates yourself. (Property owner must allow sublets.) If you do this multiple times with the right numbers, you can create passive cash-flow.
- Find a Property where the seller is willing to do “Rent – to – Own”, rent out additional rooms as an AirBNB to cover the mortgage and create cashflow: save, save, save, then do it all over again.
- Buy a livable fixer-upper in a growing area, DIY, and sell for profit!
- Purchase a Duplex and rent out the other side for enough to cover the mortgage or more!
- Don’t stop there – it usually takes more than one property to change your situation. Keep going!
- Network with other real estate professionals – maybe you will find a private lender willing to invest in your potential! Try Bigger Pockets*
Time Is Money
As with any investment, the earlier you start investing, the better.
Now to clarify, this type of investment is not always one that gives immediate returns. It’s often a long play: not popular in our day and age. We are used to instant gratification. However, it may be wise to pursue something that can make us more successful in the long run.
To The Critic
OK, but is investing actually realistic? Is it something just anyone can do? Well no, not anyone can invest in a home and not everyone should.
It is important to be educated before making a big decision like this. While I can’t claim to have all the trips and tricks, I did a good amount of research when I received this assignment and found a couple things that might be helpful.
- First, make a strategic plan and set goals.
- When it’s time to buy a home or investment property, plan to buy low and sell high.
- DO NOT buy at the top of the market, at the highest price, with no way to add value in the future.
- If possible, find a home priced below comparable homes, one that you can add value to and create equity.
- Study your market. Look for “pockets of potential value” in the housing market.
I won’t pretend that there are no risks to investing. It is not uncommon for investors or even homeowners to lose money in real estate, especially when they don’t see their home as an investment. Sometimes things that happen outside of your control: a market shift or change in life circumstance, causing property owners to need to sell or even face foreclosure. Poor investments do have consequences, causing stress and anxiety. Educate yourself, learn from others. (Subscribe to The Inspiring Investment’s Newsletter). Understand what you are capable of and work within that framework to take a path in real estate that can benefit you the most: there is more than one way.
It’s so important to see your home as an investment, a tool for your financial future, rather than an emotional purchase.
What If I Make a Bad Investment?
Sell. Quite honestly, sometimes it’s better to get out from under a property that isn’t right for you and start over. It’s time to cut your losses, but don’t give up, don’t stop learning.
I have been convinced, since my time with the Inspiring Investment, that when done correctly, investing in real estate can be very beneficial. Personally, I plan on filing this information away for a day in the future when I come into some money to use it to create some reliable side income.
Ask yourself, are you willing to stretch your traditional way of thinking to create potential gains in the future? What will you do with this information college students?
Real estate will only give to the extent of effort you put in, but it can change your life. It can change your life for good.