How Any Young Adult Can Invest to Purchase Their First Property on their College Graduation Day
Recently, I have been discussing with two that I coached in minor hockey their future plans, (Caleb Irvine and Cam Hall). They each told me, “I want to be able to start investing in real estate as soon as I graduate from college.” The question though is: at the age of 18 years old, how can they set themselves up for success when going to college? It’s a pretty easy question to answer but each young adult will have to include a few different metrics into the mix like; I just turned 18 years old, I am away from my parents, I can finally do whatever I want …… LET’S F*CKING PARTY.
I recommend having your fun while you can before life gets too serious! I’m a firm believer in balance and there is nothing wrong with enjoying life. To provide an answer to Cam and Caleb’s question, they will both need to figure out how they can save $150 dollars per month to invest while going to college. To do so, I would recommend that students find a part-time job where they can earn at least $150 per month.
The concept that I am going to explain is called House Hacking. This is the strategy that I use for my current living situation. With this method, as explained below, you are going to be living large once you turn 30! It is only going to take $150 dollars per month to achieve these absolutely incredible results.
Most kids when graduating high school usually receive some gift of money to help aid in the transition into adulthood. In this situation, both Cam and Caleb were able to save $5,000 dollars before their departure into the real world. They accomplished this from working summer jobs and also receiving some financial aid after graduation. With $5,000 dollars in hand and a monthly spending plan that will allow them to save $150 dollars a month, Cam and Caleb will be able to turn their money into $15,036 dollars by graduation day.
This will be achievable by using the standard ROI of 12% from the SP500 index as stated in my previous blog post, One critical mistake any person can cut out of their life to become a millionaire. Even if you are not able to save $5000 by your high school graduation, this does not prevent you from still accomplishing what I am writing about. It’s just going to take a little bit more discipline and work; instead, you will need to save $300 dollars a month. With this money, you will use to dollar cost average, which will result in a sum of $17,205 dollars on graduation day.
Breakdown of the numbers – use this link to compare what you can do
Fast forward to 4 years later, when you are 23 years old and have a college degree in hand and $15,036 dollars in the bank….. What’s next?
The reality of getting a full-time job! With the skillset and knowledge, you accumulated from college, with the certain credentials to pursue a career sounds like a win/win right? 100% it is!
It’s a strategy I call “House Hacking.” I currently use this exact method for my living situation. I have to say, it’s the single best thing you can do when you’re young trying to save money while working full time! What exactly do you do?
The answer is to purchase a house with a basement suite, consisting of two bedrooms in each unit. The idea is to have the rent from the basement suite and the room rented upstairs to cover all of your expenses.
Also, if the property you purchase is near a college or university (which most of our current personal investment properties are), this makes the basement suite much easier to rent out.
The house we are looking for is 240,000 purchase price financing 2.44% interest rate with a 5% down payment of 12,000 amortization over 25 years.
As you can see on this property’s rent roll breakdown, your monthly living cost will only be $35.00 per month. With the $1,800.00 that you would normally spend to own and live in your property (without renters), you will now be able to invest those funds in the stock market.
If you are to invest your $1,800.00 per month into the stock market for the next seven years of your life, on your 30th birthday you will have a grand total of $217,922.00 worth of investments.
Imagine your 30th birthday that instead of celebrating, “I just paid off my student loans,” you have enough money in your bank account to have financial freedom.
Wealth=Freedom, Discipline=Freedom, Success=Happiness, Happiness=Peace.
Through mentoring Caleb and Cam over the next four to five years, and their execution of this strategy, we will be able to show the power of compound interest over time and demonstrate how investing in real estate is life-changing. Throughout this time period, we will give updates indicating exactly how the entire process works. While this process can be very far-sighted, it is achievable. I intend to demonstrate this to readers by sharing Cam and Caleb’s future success.
I have a personal goal of helping more people become “Financially Free” than financial coaches, Dave Ramsey or the Rich Dad Poor Dad author Robert Kiyosaki, who has had a massive influence on people’s lives. I have the next 80 years to accomplish this feat.
I do see a big gap in information from social media financial coaches, do to the simple fact that a lot of information provided is all based on what you can do in the U.S.A discussing 401-k account things that aren’t applicable in Canada.
If anyone has any questions, please reach out! I offer my services to anyone who is interested and wants to understand what it takes to have “Zero Financial Stress” like myself. I will put a plan in place for each individual, basing it on the circumstances of the individual and their personal realities to fulfill those goals, turning dreams into reality. It’s a great feeling waking up every morning knowing you have other sources of income while also enjoying the reality of a 9-5 Job. By trusting the process and sticking to your goals, you too can have enough passive income and financial flexibility that will allow you to choose if you need to work your typical 9-5 job in the future.
I would also like to thank both Caleb and Cam for allowing me to follow and share their personal success and assist me in growing my blog. Please don’t forget to subscribe to our newsletters that will automatically email you with our latest monthly blog.
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