We all wish we had started investing in real estate earlier. But when I talk to young people (I’m a high school teacher, so I get to do that daily) about the idea of investing in real estate, the overwhelming initial response is that it’s not something they can do until they’re older.
Wrong, wrong, wrong.
I will talk about the plan I call “REI Before a Mai Tai.” It consists of four steps a young person should follow to set themselves up to buy their first real estate investment property before they can legally purchase and drink a Mai Tai.
It’s not all that complicated. And to be clear, this plan is where the young person does NOT need their parents (or anyone else) to cosign on the mortgage.
I will provide the content below as if we are looking to guide someone who is turning 18 today and wants to buy their first property the day before they turn 21. Therefore, they have a three-year timeline. So if you are a teen, or you know someone who is, here are four steps to enjoying the sweetness of passive income before the sweetness of a Mai Tai.
Enjoy!
Disclaimer: Every lender is different and may vary with regard to the requirements and policies contained in the steps below. But even with those differences, this plan can work for just about any teenager.
How to buy a rental property before you turn 21
Step 1: Get a W-2 job
Of the four steps, this is the one I consistently see cause the most struggle for aspiring young real estate investors. To help find solutions, I’ve interviewed professionals who work in the mortgage industry and asked them what exactly a teenager would need to qualify for a mortgage. As it turns out, satisfying the requirements is not that difficult.
The short answer? They need work history in a W-2 job. This will tell the lender that our applicant has a steady income stream. This is important since lenders need to know that the applicant will be able to make their monthly mortgage payments.
Now please don’t think that I’m…