There are several different ways to get started in real estate investing, but I think house hacking is the best for investors that are young and just starting out.
House hacking means you purchase a property to live in and also to rent, whether it is another unit or bedroom. This can be done with a duplex where you live in one side and rent out the other or in a single family house where you rent out rooms.
House Hacking is a Great Idea for Young New Investors
I often pitch this idea to younger investors who are looking to get their own place. Why start out as a renter when you can start out as an owner and landlord, right?
This isn’t to say you can’t house hack at any age, but in our younger years we often live with roommates. Rather than pay rent, why not have a mortgage instead that is covered by your tenants/roommates. This way you are building equity in a property you own. Even if you have to cover some of the costs yourself, it is still better than just out right paying rent.
Plus, starting when you are young puts you ahead of the game. That equity can become a real useful tool in the future. It is also good for building your credit up as each mortgage payment is made successfully.
Qualifying for financing/Having Down Payment
This is the big issue with younger investors. There are so many different options out there, especially when you are a first time home buyer.
FHA loans with low down payments exist for anyone buying a primary residence, but if you are a first time home buyer their are additional programs and credits out there.
It may turn out that you need very little money out of pocket for a down payment. An associate of mine recently told me about a loan he has for first time home buyers that offers $8,000 as a grant. Certain income restrictions need to be met, but if you are just starting out you likely meet them.
The point is, shop around. See what your options are and who can help.
Remember, if you do ask then the answer is already no.
Check to see if the rent will cover your costs with the property calculator!