So I'm a college student, I attend Santa Barbara city college. I'm receiving yearly checks due to a settlement I got as a child. I'm originally from Bakersfield, where the housing prices are a lot cheaper. Should I move back and finish my college there? My next check is going to be $20,000. How should I invest this? My uncle is a realtor and says I should invest it into units (property) and rent it out. Can someone give me some tips or advice?
The answer to that depends on how active you want to be with that money. If you want it to be completely passive just put it into an index fund.
More actively is your uncle offering to help you find a cheap rental property? 20k is only enough for a down payment and you'd have to go through the trouble of finding and keeping tenants.
If you want to actively trade your money. Then you've got a whole lot of studying to do.
These three answers range from least to highest reward and least to most effort.
No. Buy royalty trusts. BPT and PBT and others for example. pays you the same as a rent house and you don't have to fix anything or deal with meth makers. Valuation fluctuates just liie fucking houses. Houses are high now and oil is low. Hint, hint.
No more classes and school anon, this is real life now.
Go get your hands dirty and learn.
Women that dress modestly and families with no young children tend to leave properties in the best condition.
Single men NO NO NO unless they seem like workaholics- those guys are ok.
Single women OK, but only if they seem old fashioned types.
Families ok if NO YOUNG CHILDREN.
Older couples best
Cheaper properties are bad, the tenants trash houses regularly.
You charge you know, 500/month rent in the house that is worth 40,000$, but the problem is the people that rent from you will TRASH it, so getting 1500 month from a property that cost you 400k is better, you feel me?
Duplexes, triplexes, etc. That way all your tenants are next to each other. That is key
How much do you reckon a decent triplex would run me? How many years would you say the profit could be put down on more for expanding my empire? And thoughts on deposits? (Jew the deposit or not Jew it?)
Look anon to be perfectly honest, I had a lot of my money in real estate, up until a few months ago.
Sold the buildings, with the tenants intact, sold it all.
Just man... the way property prices have been going up? Through the roof. The real estate and the rent prices just goes up and up and up and up.
I think you are entering this market at the height of the bubble
Decent triplex? Millions of dollars.
Which isn't the end of the world- the bank will throw millions at you with 20k down- but if real estate prices go down 1%- your 20k is wiped out.
Don't get too excited if you don't even know what property costs. You can't do much with 20K in California, even in Bakersfield. And when the next downturn comes, the Central Valley always gets the shaft.
No anon, I feel you.
Look- I won't tell you what to do.
I'll just lay the facts out on the table for you.
When property values go up, being a landlord is the best business on earth- you make money on the property going up in value, AND you make money off the rent.
The property value HAS been going up, for 8 years now, at a very, very high rate.
When things go up really fast, sometimes they go down.
If you buy a 2 million dollar duplex with 20k down, you own, effectively, 1% of the duplex, understand?
Now, if it goes down in price 1%, suddenly, your equity is worth $0.
But if it goes up in price by 1%? Now your 20k is worth 40k. If it goes up 10%? 200k.
And there is a strong possibility that the price of your duplex will go up 10% a year, every year. There is also the chance that it will go down 50% next year- no one knows, but we all have opinions.
And if someone claims they know something- just know that it's an opinion.
Um, man, look. How about this.
Tell your uncle you have a proposition for him. If the real estate investment is so good, why doesn't he invest 80k, own 80% of the house, and you invest 20k, and own 20% of it, and you guys buy a 100k house together, and then the company that you own 20% off pays you $8 per hour for your time as a property manager, for every hour that you work as a property manager, using the rent as money for your salary?
I think that's your best bet man, If your uncle doesn't want to do it, don't invest.
Remember: The talk is cheap, money isn't. So far your uncle is full of cheap talk- we'll see
I'd say that finishing your degree takes priority over everything. You can figure out what to do once you're done.
But I take back what I said about 20K not being enough -- in Bakersfield it would be. The price history is quite a roller-coaster though.
If you want to do real estate, figure out what's going to be big in ten years. Maybe Merced?
My uncle says he refuses to do partnerships (go figure)
My aunt who lives in Bakersfield is a real estate agent too though, maybe she might be willing to do an investment like this. I'm starting to understand what you're saying though. Sounds a bit scary, but I'm picking up what you're putting down.
Yeah, definitely, having some education to fall back on is definitely a necessity. Not looking for a get rich quick scheme, just something that will put money in the bank and I can live more than comfortably.
Anon, be wary of your uncle and what he says
This isn't business advice so much as it is life advice- DO NOT TRUST THIS MAN!
Here's the deal- he doesn't think the real estate is a good investment- he just wants you to buy a house, because then he gets to make a commission off of you.
He's a salesman- I'm a salesman too. The thing is, you don't pitch family- family is family.
My advice is to go buy something broken, fix it, and see if you can sell it for more.
Go spend 50 bucks on a broken washing machine, fix it, see if you make any money. If that doesn't work, try doing it with something else.
Just try things until you make money,
Every successful entrepreneur ran 10 companies into the ground- the smart ones, we buy 1 broken washing machine as a test, and fix it, the stupid ones buy 100 as a test.
PS: washing machines is an example. I have never done it. I dont know if its good money- go spend 50 bucks and find out
Oh, i would never buy anything from him. I lived out here with him in Santa Barbara and he still charged me 500/month. I'm not his biggest fan right now, but the advice he gave me did seem pretty decent.
I like your analogy.
I'm growing to like the /biz/ community, inspiring folks.
Honestly, the way most people get rich is selling shit.
Now there's two kinds of shit you can sell- stuff where you add no value, and you sell on a small commission (like real estate or loans, stocks, cars, ), this is mostly for you know, sales people. You gotta have that special sauce, to do this well,
Now there's value added sales- where you buy a broken washing machine for $50, spend $50 on parts, and sell it for $500- you added $400 in value through labour.
But because of this labour, we can only sell $500 a day, so we need to be able to train employees to fix the machines- this is good for people that aren't born cold blooded salesmen, but the manager type.
You gotta figure out what you are, and then what you're gonna do.
You need to figure out a process, lets keep using washing machines as an example ok?
You need to learn the best place to get the broken ones, the best place to get the parts, the best way to sell the machines, the washing machines that sell the best.
You need to learn all about washing machines. This will cost you weeks, months of your life. You need to buy the broken washing machine, grab a screwdriver, and just start learning.
Once you've gotten to the point where you know all about the washing machines, and you make money on every washing machine you do, you need to do some calculations.
How much value add does the repair add (example, sales price 500- 100 - 50 = 350)
Then how many hours of work to get that $350.
Then if you get a number over $20 an hour, you hire the employee, teach him how to do it,
You get it. That's how you grow the buisness- it's the only way. You have to be hands on- you have to do the dirty work, because then you know how to do the dirty work, and you can teach employees the best way to do it.