Investments for beginners

So here's the deal. I'm 24, paying my way through school, working full time, and my only debt is my car payment and a credit card. I know the first thing I need to do is get rid of the card and pay off the balance. I'm under the assumption that I will always have a car payment, it may go up or down depending on what I'm paying off, but it will always be there. But then what? I already save what I feel is a good bit (10% to my 401K and 20% to a savings account each month). I don't make much, but I'm not planning on working for the company I'm with after I get out of school.

Right now I'm considering buying a duplex and living in one half and renting the other half to cover my mortgage. My parents seem to be all for this, and I agree that property is an investment rather than a liabilty like my cars. I'm thinking a fixer-upper that I could renovate would be a wise choice since I'm young and willing to do the work myself. Would a bank be willing to loan me the money with nothing down for something like this? Again, my parents seem to think so, and I'd like to believe them, but has anyone here done this? Any other thoughts on creating some passive income?

I don't know about the "nothing down" part. But it appears mortgage lenders seem willing to do anything to move loans these days.

I would caution on the part of buying a fixer-upper ... yes, you're young but it takes more than youth depending on how much fixing-up needs to be done. Fixer-uppers can be money pits and drain any equity that accrues over time. Before buying any old property, I would recommend hiring a professional inspector and getting an unbiased opinion and report. This will protect you from any possible hidden structural or chronic problems with the property...

And unless you have at your disposal, the proper tools and a helper to do the fixing-up you may find yourself hiring the work done ... I've been down this road. There's only so much one person can do without a second set of hands.

Good luck ...

I'm thinking a fixer-upper that I could renovate would be a wise choice since I'm young and willing to do the work myself. Would a bank be willing to loan me the money with nothing down for something like this?

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Why are you assuming you will always have a car payment. Save up a little cash and buy a car with it . You may have to drive a pos for a while, but you will save a butt load in the long run. just my 2.5 cents

Amen junkxj. I agree 100%. I think it is a better deal to get a paid for car before trying to add on a mortgage debt.

I have driven paid for jeeps for almost 3 years now and I don't think I have ever spent more than $1200 in a year for repairs.

Getting rid of that inflated car payment will work wonders for your bottom line!

As far as a duplex goes...it could be a very good investment, provided you have the cash and the ability to repair anything that may go wrong on your renter's apartment.

I just got done buying my first home when I was 24 and didn't put anything down. There are a bunch of different types of loans out there so if you are serious about it, then go talk to a few financial people (don't just settle on the first one you talk to). It doesn't cost you anything. They have formulas for how much income you have and credit rating that will give you a ballpark figure of what you can afford. I personally believe it is hard to go wrong investing in real estate, but it is area dependent. My inlaws lived in a home for 12 years, fixed it up nicer than any others on the block but struggled to get back what they paid for it.
Good Luck

Right now, as far as vehicles, I have 2 that are paid for, my Jeep and my tow rig, a 90 Chevy pickup. My payment is on the 05 WRX wagon I bought last month. I was driving an 02 Impreza 2.5RS up until then, but tires, brakes, etc. started to add up to more than the increase in payment, not to mention the thousands it would cost to make the RS as fast as the WRX is stock. I like the fact that if something goes wrong with the car, the dealer fixes it. I don't have the tools needed to fis todays electronics, nor would I want to spend my days off working on my daily driver. Once the car is paid off, I'll probably look at a new truck, then once that is paid off, another car, and then a truck, and so on. That's why I forsee always having a payment.

You gotta pay to play, and I can justify the purchase of a vehicle in my mind because it is something I enjoy. I probably spend about the same ammount of cash in a month on my car that most of my "friends" spend at the bar. They enjoy paying off their DUI's and I enjoy a weekend of wheeling or autocross. I don't mind having a computer that is behind the times, while some think that the greatest joy in life is to have a video card that cost more than my whole PC, and 3 gig of ram.

As far as driving a POS for a while, I did that. I had an 87 Subaru GL wagon. In the months it lasted, I spent more money and time fixing it than I had available. It just dosen't seem logical to me to have to spend all of my free time working on some POS to keep it running when I could be spending that time wheeling or at the track. I'm not asking anyone to agree with my logic here, I'm asking for input into the purchase of an apartment building to create passive income.

I agree with you on that note ... new or old vehicles are an ongoing expense and they need to be included in your budget. And income property is an excellent way to get someone else to pay part of your mortgage ... not to mention the tax breaks you'll enjoy from that income property.

As I said earlier ... just make sure the property you get into doesn't need too much work. Plus, you may want to take a short course on property management and become extremely familiar with the state and local laws governing renters rights.

Again, good luck.

bbaker80 said:

As far as driving a POS for a while, I did that. I had an 87 Subaru GL wagon. In the months it lasted, I spent more money and time fixing it than I had available. It just dosen't seem logical to me to have to spend all of my free time working on some POS to keep it running when I could be spending that time wheeling or at the track. I'm not asking anyone to agree with my logic here, I'm asking for input into the purchase of an apartment building to create passive income.

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They guy that helped me get on track to be out of debt and have any kind of retirement, other than social insecurity, is Dave Ramsey.
http://www.daveramsey.com/
This guy has been there, done that, and has a simple plan to make investments really worthwhile, especially in the long run. I don't believe that he's using his position to take advantage and he is accessible. Just my .o2. dn

Forgot to put my .02 in on the fixing up part. We bought a brand new townhome and it takes a lot of time still to keep it up. If you buy a fixer-upper and you actually put forth effort to fix it up, you'll have a very tough time finding time to wheel or do anything else. Big commitment.

I wondered how long it would take before Dave Ramsey came into the thread. His studio is about 5 miles north of my place.

He is the one that helped me understand the car pay off and the house pay off.

"There's no such thing as good debt," as he likes to say.

Is that the guy who filed bankruptcy ... went from a multi-millionaire to rags ?

I agree with that statement in theory, but unless you have a lucrative business, high paying job with stock options, money already in the bank from a trust fund... or family that's willing to give you whatever it takes to pay cash ... then it's a moot subject.

The appreciable rate of property values challenges the wait, save and "pay cash" philosophy.

This is just basic finance.

Cottontail said:

I wondered how long it would take before Dave Ramsey came into the thread. His studio is about 5 miles north of my place.

He is the one that helped me understand the car pay off and the house pay off.

"There's no such thing as good debt," as he likes to say.

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