How do I get into Real estate, like renting out Apartments/Houses when I am 18
I am a senior in high school, And in the future, I would like to own houses or apartment buildings that are being rented out. Would like to know how I could get started out.
As far as skills go for being successful in real estate, there are two primary ones that come to mind: intelligent investing and sales. Real estate is like a mix of those two things. You need to know how to find a good deal, mitigate risk and then sell people on either renting out your property or buying it from you. If you can spend your first few years getting licensed, learning these two things, getting advice from your mentor and saving up a good sum of money you should be set to become successful in real estate soon after you're 18.
Being a landlord can be good, in that once you have apartments or buildings to rent, you may find that you can earn a good income without having a full-time job. However, no road to success is ever easy. Here are some issues to contemplate:
- you need to first buy the apartment buildings before you can rent them. If the building is already used for that purpose, the current owner is receiving the income, so the purchase price would be the value of the building and the value of income for five to ten years. Even a small building might cost $500,000 or more, plus the extra you would pay to the prior owner for loss of future income. That could easily be a million dollars or more.
- securing assistance from a venture capitalist may help, someone who invests and shares some profit, but doesn't participate in administration.
- you will need insurance on the property, as some tenants may damage it
- you will also need a lawyer for assistance in contracts and other legal issues
- you will need a relationship with a local bank, as you will periodically need money for repairs.
- you will also need access to plumbers and electricians for routine maintenance throughout the rental property. Town codes may not allow you to do repairs yourself.
- a business license is also probably required.
There are likely many steps I overlooked or didn't know. Real Estate is big business, and once you are established, it could be a well worthwhile career. All the best to you.
Real Estate is a great source of passive income. And thinking about this at such a young age is impressive. All of the answers posted so far are all good. (So I am not going to go into calculation or finance, and all those good stuff.) And each person has their own way to get there.
Entry into real estate requires more money than say stock market. Therefore, you must come up with some strategy: (This is an example not a step by step advise and there is no guarantee that you will get your apartment building. )
1- You will not going to have the money to invest in your rental house or apartment right after you graduate from school. (Unless someone already gave it to you.) So how will you get money to invest? Work and save diligently. (Get a good education, get good paying job and save as much as you can.)
2-Get to know a good real estate agent. He/she knows the market in your area. I say good agent. The one who will work with you long term, not the one who tries to make a quick sale. I say good agent. The one who has good relationship with a mortgage broker who can work with your financial situation.
3-Buy your first house. Location, location, location... look for one that have potential for growth. Your first house will be your primary residence. But, no one say that it cannot be a duplex (or even triplex if you can afford it.) Or if you buy a single family house, rent out spare rooms.
4-Money for the second property down payment? If you have save enough or have enough equity in your 1st home cash out refinancing, you can purchase the next property. (Use this one as your primary. Primary home mortgage interest is little lower.) What did I say earlier? Good agent, location, location, location.... Rent out spare rooms or units.
6- Once you have own enough individual rentals and want to consolidate them into an apartment building, you can sell them and do a 1031 exchange to get your apartment without capital gains tax consequences.
Let me know if it works
To buy a home/Apt, you need to save enough money for down payment typically 5-20% of cost of Home. If you need to buy an apt for 150K, roughly you should have 30K in Cash and your salary should be 40-50K per year.
You should earn enough income to qualify to buy a home. Usually they see your debt-to-income ratio), in simple terms, if your gross income is $5000, if your rent /car payment/credit card payments together is $2000, your ratio is 0.4 (2000 /5000)
Experts suggest one should spend 28% or less on monthly mortgage payment, which determines the house you can afford based on your income/mortgage rate/Down Payment.
Mortage rates will be higher and needs 20% min down payment to buy a property to rent assuming you can qualify for the loan.
There are REIT funds/ETFs in which one can invest just like in stocks if one can't afford to own a investment property and going through the risks it comes with.
I suggest you research little more on this subject...maintain good credit score. Earning more and saving more ...you can able to own a home sooner in your life (by age if 25-30 is awesome achievement)
Your parents can help you understand this process.
You can research the home values, rental cost etc. on www. Zillow.com or www. Rediffin.com etc.
You can earn a real-estate license to make some money & work for real estate company or agent to gain some knowledge and make money for your college if it's of your interest.
Hope this gives some idea! Good luck with your future endeavors!
I've assumed, like most of us, that you have no money to invest. You will need capital to invest either by saving for a down payment or finding an angel investor(s). You will have to live below your means. Even with this, it may take a lot of time to save enough for your first property. Take a course in pitching a product and creating a business plan.