If you were me....

General Real Estate Investing
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I’m 22 years old. I have been enrolled in college for 3 years now, but after being my fraternity president for a year I realize that I have learned all I came to college to learn and am taking at least a few years off to re-evaluate why I was there in the first place.

I have 600,000 dollars with a financial advisor and I own a small part of a casino which gives me about 50,000 a year post taxes. My time is endless and I am experienced (thanks to Hurricane Katrina and a Fire which burned down my house) in dealing with insurance companies, crooked contractors, construction companies, and realtors. I recently completed my real estate licensing course and am certain I will pass the upcoming test. My past summer was spent researching the real estate market in my area so I have a better idea of expected rent/building prices.

I do not want to be a real estate agent other than in title. I followed one around for a few days and found that out.

I want to make it very very clear that I am not going to school anytime soon, so please spare me the lecture about the importance of education.

Right now I am living in a university area in New Orleans and have a 100 person fraternity (most of whom need housing each year). There are tons of houses for sale because freshmen at Tulane were temporarilly not allowed to live off campus. Next year sophomores will be allowed to live off campus greatly increasing the demand for student housing. People selling empty rental houses near campus don’t realize this as they are removed from University life.

I have a very high standard of living. I spend just over 50k a year currently.

What I am really curious about is what would you real estate savy people do given my situation…

Lastly my goals…

  • significant long term appreciation on my investment
  • a “job” where I mostly do what I want and can essentially act as if I was retired
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Sorry if I come off the wrong way. Another goal of mine is to be extremely charitable which is one reason I need significant return on my investment.

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Ignorant post removed by moderator.

-Rich_in_CT

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hey ted,
i am :shocked . you can’t come off sounding the way you just did in RE, it’s a people business !! you still need a lot of education in RE to be an investor. you’ve got a long way to go. being an agent has very little if anything to do with RE investing. lastly, just because you “knew” your market last summer , doesn’t mean you know jack in todays market,maybe enough to loose your butt or all your money. CURE for this is a huge dose of reality; along with a huge dose of education. otherwise :flush .
harriet(fl)

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I know you’ll think I’m kidding but I suggest a job in the post office. They don’t require much education, it’s virtually impossible to get fired, and you can act as if you’re retired right from the start. You could take your $600k and put it into a total stock market fund. Over the long run the market grows about 11% a year on average. Add this to your casino earnings and government salary, and you’re set.

I bet Habitat for Humanity has a strong presence in New Orleans. If you volunteer your time on weekends, you’ll keep your fingers in real estate and see a more positive side of the construction business. This might satisfy your charitable side.

If on the other hand you want to be self employed, I can tell you it’s rewarding, but guarantee you will never work as hard in your life.

Now, what is it you really want?

6

Wow, you have a lot of capital and cashflow going on but have no idea whatsoever on how to use it.

Using a financial advisor to tell you where to put the money? Bleck.

That’s the first thing I would figure out how to fix, learning how to manage your money on your own and educating yourself in business / real estate / stock market.

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This is going to be cold, crude and to the point. Just FYI.

You’re already spending more money than you make. If you do manage to figure out a way to make more money, then all that is going to happen is that you’re going to spend even MORE money. Until you figure out that life isn’t about having a “high standard” of living (which I’d wager, that you have little to actually show), you’re not going to go anywhere.

I don’t know what you went to college to ‘learn,’ but if you’ve already spent three years, there then why quit with only a year to go? That seems to suggest that you won’t tough out anything difficult (heck, college is easy compared to the real world).

You already make twice as much as the median level income for your area with probably 10 times as much saved as the average local, yet you spend more than you make and don’t know what to do with what you have.

You want a “job” where you do nothing. You don’t want to be an agent because they actually do do something. This more than suggests that you’re lazy and wouldn’t be willing to stick with anything that requires some effort (hint: EVERYTHING worthwhile requires effort).

With that said, here’s the advice:

Stay in college. Screw the degree, education, etc. You’re already too smart for that anyway. Stay there because you’ll be safer. You may even learn a little bit about real life (if you manage to stay out of a drunken stupor long enough <that ‘higher standard’ thing>). I’d suggest leaving the frat bros and going it alone for that time. It’ll help. Trust me on this one.

Invest your savings in something safe UNTIL you learn a little about something that you can afford to risk. Heck, a return of only 6% annual yield will net another $11K or so annually.

Learn to reduce your ‘standard’ of living ito work with the income that you’re already making. Hey, your life is YOUR life, but I’ve got to say that I personally can’t imagine what you could be spending $50K + on every year, especially when compared to the cost of living for your area. I think that this is where you REALLY need to focus your attention. You’ve already got the “job” you desire, you just don’t know it yet.

Raj

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Just want to throw a few things out there

I am a very hard worker when it comes to doing things I enjoy. This is something I enjoy.

I am getting a real estate license because if I plan on buying houses it will save me tens of thousands being able to represent myself. I do not think that investing in real estate is similar to being an agent.

I don’t think that college is hard by any means, but why do something just to do it? If I have no real reason for being in college other than finishing I am just wasting my time and my money. I’d rather go back in a few years when I have something that I want to learn.

Nobody really gave me the kind of answer I wanted. I don’t want advice for life as I am probably the happiest person I know, but rather just ideas on what you would do if you wanted to become a real estate mogul starting out with what I have. Perhaps I should have made that more clear.

I actually do have a plan and although by now I think I should just post it under a different name if I want any type of positive response I will continue anyway.

Briefly… I’m going to find a house with asthetic repairs needed and spend a month or two making improvements while finding renters for the next school year. This house will be able to generate the income needed to pay for it’s own mortgage, insurance and upkeep (hopefully with a nice christmas bonus for me). I understand it’s easier said than done, but i will do my homework for this and i will only purchase a house if I am certain it meets my criteria.

Once the house is rented and I am confident it will operate smoothly I will continue the process by purchasing more houses using a modified criteria (based on what I’ve learned at that point). Most likely this time I would purchase 2-3 houses, again doing most of the improvements myself.

Year three would be very similar to year two except a little larger in scale.

By year four I would hope that I would have enough houses essentially supporting themselves that I would be able to hire someone to take over what I was doing (collecting rent/making repairs/dealing with tenants).

By then I would be able to put all my effort into finding and purchasing new buildings which would be put into the hands of my employee after i had made repairs and rented them out. Essentially I would be able to work when I wanted and would be making money at the same time while my investments appreciated with the market.

Way down the line- I would own countless buildings and employ multiple property managers to see to it that I never have to do anything i don’t want to do. All would be self sustaining until of course I sold (for tons of profit) or the mortgage is paid off leaving me collecting cash each month.

This sounds very vague, but I assume you all can grasp what I am trying to convey. Is there something I don’t get that makes this so much harder than it seems to be?

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Ted,

Your plan can work if you learn the business before you buy anything.

Briefly... I'm going to find a house with asthetic repairs needed and spend a month or two making improvements while finding renters for the next school year. This house will be able to generate the income needed to pay for it's own mortgage, insurance and upkeep (hopefully with a nice christmas bonus for me).

If the rent only pays for the mortgage, insurance, and upkeep, you’ll join the vast majority of newbies who fail in a very short period of time.

Let me be clear - a college degree is not required to be successful in life. However, a college degree can add credibility and open doors. Also, life is long and if is extremely unlikely that you will be a real estate investor for your entire life. Having a college degree will greatly increase your earning potential. Most importantly, the fact that you’re dropping out of school indicates that you don’t have the persistence to own and operate a rental property business.

I’m not going to try to talk you into going back to college. However, if you don’t do your homework before starting to buy rental properties, it won’t be long until that $600K is gone and you’ll be flipping burgers (and wishing you had that college degree).

Good Luck,

Mike

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OK, I read every post here, and Do Not agree with 85 % of it, BUT I do like Mike’s (PropertyManager) train of thought here…

He does make some good points and I liked reading his comments.

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First off, I wonder if you have any idea of the potential your sitting on?

Think about this for a minute.

You finish what you started at college and get a job. Now since your at college why not live like a college kid. What have you got 2 years left?
So for 2 years you don’t touch that $50K/ year you got coming in. Instead you get a college kid JOB and use that money for expenses. Now you have $700K!!! See where this is going.

Then you graduate. I know working for a company sucks. I’ve been there. But…Look at it like this, because you’re smart, you know you can let that crappy corporate job pay you while you wait to retire in 6 years!!! What… retire in 6 years? Yea, and think of all the FUN you could have at a corporate job KNOWING you can tell the boss to screw anytime you want. Remember your not WASTING this time, your LEARNING and SAVING. If you have the discipline to do this there is no way you’ll have to wait 6 years. Keep saving and LEARNING and you will be a guarenteed millionaire before you hit 30!!!

Now if that doesn’t light a fuse in you I don’t know what could. Dude you’re more than half way there ALREADY! Your biggest concern should be NOT BLOWING what you already have. You don’t screw up, your done in less than 8 years TOTAL!! Show me another college kid who can say that. When I mean done, I mean you do what you want. By then you’ve got some seasoning, some experience. Hopefully you made some investments with that money along the way and learned from them. You’ve got some good ideas, what you don’t have is the experience. And I can tell you first hand that “experience” is THE most expensive college in the world. You don’t want to pay $500K for that tuition. Learn at a cheaper institution. Like the college of “I better not screw this up”

It’s your’s for the taking. You just have to develope some determination and not mess it up.

You’ll appreciate this at a later date…

“The older I get the smarter my father becomes.”

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tedferret,

I commend you on maintaining your cool in the face of some pointed critique, that will be a very useful skill. Read through all of the responses to your post, each one has at least something to offer you in guidance and warning. You are in a unique position; cash flush, income, smart, motivated and apparently focused on where you want to be in the future. We are in a buyers market so cash is king, but don’t blow it all in a handful of deals. Learn how to find truly good deals and manage your investment wisely but don’t forget to diversify as there are many growth opportunities beyond real estate. good luck

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Ted,

You have already met your goals. You have $600K invested, you have $50K income from your casino ownership interest, and your time is already your own if you want it to be. If you are satisfied with the lifestyle supported by your current income, you never have to work to put food on the table.

You don’t have to work for your income so you already have your “job”. Your investment nestegg should benefit from long-term appreciation with proper management, so you just have to wait to see if your financial planner can realize this goal for you.

The “goals” you listed are not really goals, they are accomplishments. If you are not satisfied with your accomplishments and not ready to sit back on your haunches for the rest of your life, then I guess you need to redefine your goals – goals that are specific and measurable.

A goal of “significant long term appreciation on my investment” tells us nothing. You could put $5 in an interest bearing account in the bank and wait a couple hundred years to realize significant long term appreciation on your investment.

Set timelines and dollar amounts with goals like
[]Increase my net worth by 5% next year and each year after[]Have a passive income of $60K from rental property by the time I turn 40[*]Have a $2 million net worth twenty years from now.

Do you get the idea? Pick one of these, or define your own. Goals should be specific, measurable, and have a finite timeline for achievement.

Now, what is your goal? Tell us that, then, we can suggest a plan to get you there.

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This has nothing to do with real estate, but if I were you I’d finish your degree…I was riding along with my Associate’s Degree (Accounting) for a couple of decades when I finally decided to finish my undergrad…Took 2 years at night while working a heck of a lot of hours…Graduated with a 4.0…While I was still in the education mode, I applied for graduate school at a top national university, was shocked when I got accepted, and was proud as hell when I got my MBA 3 years later…I won’t go into the detail but that actually directly led me down the path where I’m at now with $2.5M in real estate and now working full time in REI…

You have a long way to go in life, and as long as you can afford it, and you’re as far along as you are in school, go ahead and get your cap and gown…You’ll be glad you did when you walk down the aisle and get handed your degree…Worst case scenario, if you bomb in real estate, you’ll have something to fall back on…

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Finish school, partner with some savvy local investors and purchase the rental properties around campus. Cut down on your spending, and reinvest your profits. You’re in a position that retirement-age people wish they were in, at age 22! Be smart and active; learn the business and run with it.

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So i’m taking a combo of advice from a few people and ignoring a few others. I’m flying to Santa Barbara this weekend where my older cousin (who started with almost exactly what I have minus the casino income) has been accruing property for 6 years now. He started with a half million or so and now has 80 apartment units and 4 commercial buildings. Since he is dying to show me a thing or two about real estate I am going to take him up on his offer and let him mentor me. Hopefully I can take what he has learned and do it all a little more efficiently and effectively. According to my lawyer sister he is a lawsuit waiting to happen and is not incorporated so there should be a few things I can improve upon.

Thanks to everyone who posted, even those who told me to go back to school.

BTW- my goal is to one day be worth enough so I can be involved in the purchase of a baseball or football team (even arena league :smile). Additionally I want to have enough money where I can start a charity devoted to helping less fortunate people get on their feet without forcing a god upon them. I guess I should have made it more clear that I was looking for ways to get wealthy, not ways to stay comfortable. Sorry about that.

Good luck to you all in your endeavors.

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Additionally I want to have enough money where I can start a charity devoted to helping less fortunate people get on their feet without forcing a god upon them.

Yeah, it would be terrible if anyone believed in God. :banghead

Mike

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This is an interesting read, and I remember my 20s and I sounded like ted ferret. I didn’t have his “problem” of 50k income and 600k stocked pile, but I was a know it all.

I don’t know whether you are smart or fortunate or both, but your position is a unique one. Let me give you a reason to finish college, its because that’s where a lot of future rich people hang out. You finish your time in college, meet some rich people, who will eventually be CEO’s, Congressmen, etc… and with your stash you should be on your way.

There is way more to college than ‘book learning’. If you see it only as book learning, then you are missing out on the other two thirds of your education, which are discipline to complete a task started and increasing your people network.

jay

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I have some questions for you that I would really like answers to…

Who and how, set you up with $600,000 at the age of 19 or 20?

THAT, in my opinion, is the REAL story here. Tell us the details.

Was it your family who made a bunch of money in real estate, stocks, or business??? How did they do it? Or who did it?

Personally, I always LEARN something from these stories. Let’s face it this guy has also got a cousin with the same pile of dough he has. My only other question would be why not start out asking for advice from the source of that wealth???

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Most of my family has been involved in owning one thing or another for a while. My grandfather and uncle owned a fair chunk of the saratoga harness track. A few year ago my uncle realized that it was legal to have video gaming machines on site. He convinced a number of other people involved in the racetrack to allow him to go through with it (not hard since my g-pa was chairmen of the board and uncle was president. and after raising a money he opened the “racino” and saratoga raceway became saratoga gaming and raceway.

Two years later it was a racetrack, casino with 2500 vido lottery terminals, 3 restaurants and the coolest nightclub in upstate New York. When my grandfather died his possessions would have been passed on to my father, but he died when I was younger so his share was split between my sister and I. When he died much of his property was sold to pay for death taxes (f-ing death taxes…) so the more valuable and underappraised casino shares could be passed down.

While alive he owned parking lots, commercial buildings and over 200 acres of farmland all in areas where he was the only farm aside brand new construction. He had real estate investors trying to snatch up his property for dozens of years, but he put it in a trust so when he passed his grandchildren would have somethign to start their own empires. He would have been a great person to learn from, but unfortunately that doesnt seem likely at this point.

BTW- he was the 2nd person to share my name…I am the 4th so I feel extra motivated to make back all the money that was given to my cousins who don’t share my name :biggrin

If any of you are involved with racetracks I would see if you can do it in your state. These racino things are cash cows.