If you are about to get out of college, like most of your friends, your primary goal is to look for a job. You are thinking to yourself, not only you are now graduating from college, but also you are graduating from $1 fast food burgers and moving into hi-end steak house that you can now afford with a full time job!

While there is nothing wrong with that thought, please allow us to suggest that this is also your one-of-a-lifetime opportunity to get a head start on investing in real estate, because you pile up all your unnecessary recurring expenses which will make it cost prohibitive for you to invest at all.

Here is a practical, no non-sense Fresh Grad Guide to MultiFamily:

Mindset Shift

First, you need to stop the dream of buying a beach front house, you may also stop the rational thinking of buying a “starter” house. You should change your mindset, and focus on buying your first multifamily and become a landlord. True, at your current age, you may not want to take on that work and responsibility; but if you are willing to change your mind now and execute on this, your future self will thank you for this decision years later.

There are 2 items that you need consider:

1. How can I come up with the down payment as soon as possible?
2. Where can I find multifamily in the local market?

Down Payment

Let’s just assume you did not inherit a large sum of money after graduation, just like the most of us, so if you want to invest in a multifamily you typically will try to work hard and save up a down payment. If that is the only way you can find, then go for it. On the other hand, you can also think about other creative way to help yourself get started faster. For example, ask your parents or relatives for a loan; or perhaps not even a 20% down payment loan but a 3% FHA loan. The goal is to accelerate your timeline here.

MultiFamily

The reason to invest in multifamily instead of a single family house, or a condo, or whatever, is that multifamily allows you to live in 1 unit and rent out the rest. Yes yes yes, with the concept of AirBnB, you can technically buy a single family and rent out the bedrooms. But if you want to scale in the future, taking that extra step and start off with a multifamily may yield better long term value to your portfolio.

AirBnB is a good topic of its own but we encourage to educate yourself with a course first.

In addition, you may want your privacy when you are dating, so having your own unit to yourself, so you may invite friends over any time, and not worry about the presence of the roommates, is a value-add. You also can brag to your friends (or dates) that you own the other units, I am sure they will be impressed.

Execution

Once you get the 2 items above ready, it is time to execute! Think about your current location, think about your work location, and select an area that is not too far based on your situation. Generally speaking, we would suggest to stay within 20 miles radius of your work. Find a real estate agent and explain to him/her about your situation, your budget, and your desire to locate a 2-4 unit apartment.

Once you purchase, move in to 1 unit, and then rent out the rest (using whatever marketing method your prefer: word of mouth, Craigslist, social media, newspaper… etc). At the beginning, since you are living in 1 unit, you should try to self manage it. And yes, that means you will be the one getting the call in the middle of the night to fix a broken toilet. Since you are just starting, you need to learn the system. It is not a big deal to give up some playing time or some sleeping time in exchange for long term values.

Once you get it rolling, pay back the loan to all the relevant parties who helped you. Save up all the profits, and repeat this process! Except the next time, you can use your own money as down payment, you will not need a loan anymore!