Expert: Dennis Herman - 8/29/2008

Question
Hi Scott,
   I am an 18 year old fresh out of high school and about to start college who
is very interested in real estate and investing early. My aunt mentioned to me
that while she was in college, one of her friends saved up some money while
working and was actually able to get a house:(I'm guessing with a small down
payment and a loan) and then live in it with her and some other college
students to split the cost of the mortgage payment. I've done some minimal
research on this but am very interested in a possibility like this to get started
investing. Ideally, I would like to get a loan on a cheap house and then start
into the process of investing by renovating it, then either renting or selling it
for a profit.  I am going to school for International Business and hope to get a
job in this field initially to make some capital, but eventually I would like to
own/manage many properties and be able to quit my regular job and just be
a full time real estate investor. Could you give me any tips/useful resources
on getting started?

Thank you!

Answer
Jaun

I will answer this question based on my personal experience.  I purchased a lot for $32,000 and paid it off in about 18 months.  My wife and I both worked so we could handle the extra amount on the payments.  We went for a loan and received the best interest rate available.  Back then about 7.25.  We spent another $100,000 building a house.  This was in 1992, prices were a bit different.  When it was completed it appraised out for $170,000.  

Eight years later we sold it for $220,000.  You figure the profit.  I built a new house.  Lot was $62,000 and the house was $140,000.  That was in 2000.  When finished it appraised for $250,000.  It is now easily worth $350,000.  Building may be your wisest investment.