Author Topic: Investing in property off of cryptocurrency  (Read 778 times)

nrho

  • 5 O'Clock Shadow
  • *
  • Posts: 1
Investing in property off of cryptocurrency
« on: January 24, 2018, 07:25:23 AM »
I am a 20 y/o college student who now has a ~110k net worth because of cryptocurrency, scholarships, and a job. I am interested in purchasing an apartment to live in for the remainder of my college years and to rent out after I leave.

1) Is it even realistic for me to get financing for a property?

2) Did you invest in property around my age? Do you recommend it? Regret it?

PoutineLover

  • Pencil Stache
  • ****
  • Posts: 794
Re: Investing in property off of cryptocurrency
« Reply #1 on: January 24, 2018, 08:27:19 AM »
Have you sold the crypto? As far as I know you can't get a mortgage in bitcoin.
Have you talked to a bank about financing?
If you do buy a property, how much can you put down and can you afford the monthly payments?
Can you afford maintenance and taxes on the property?
Do you have any student loans (and do you expect to need any)?
What's your earning potential in your degree, and do you plan to live in the same area after you graduate?
How much could you rent the apartment for and would you have roommates?
There's not enough info in your post to give an informed opinion either way, but those are just some things to think about before making a decision.

waltworks

  • Magnum Stache
  • ******
  • Posts: 2727
Re: Investing in property off of cryptocurrency
« Reply #2 on: January 24, 2018, 12:49:54 PM »
You probably can't qualify for any form of financing without a cosigner (parent, probably) simply because you have no income (right?) or else very low income.

Here's what I would do:
-Step 1: Sell all the crypto. You will need to pay capital gains taxes, remember, so you'll end up with quite a bit less than the $110k they are nominally worth.
-Step 2: Max Roth IRA for 2017 and 2018. Use a way-out (2050?) target date fund from Vanguard.
-Step 3: Dump the rest into a taxable account and invest in the same target date fund as you did for the IRA.
-Step 4: Go live your life and add to the money/let it grow as much as possible while you graduate, find a job, find a significant other, etc. 

Buying an apartment is not only going to be very difficult for you to do, it's also probably a stupid move unless you have a lot of time available to devote to researching properties and potentially finding tenants/doing management. Just live somewhere cheap with roommates for now.

-W


Roboturner

  • Bristles
  • ***
  • Posts: 468
  • Age: 29
  • Location: Colo-RAD-o
  • No Snacks, Just Math
Re: Investing in property off of cryptocurrency
« Reply #3 on: January 24, 2018, 12:58:15 PM »
^^ what Walt said.

You do not want to buy a condo at your age. It'll be a terrible move. keep renting.

marty998

  • Walrus Stache
  • *******
  • Posts: 5557
  • Location: Sydney, Oz
Re: Investing in property off of cryptocurrency
« Reply #4 on: January 24, 2018, 01:29:09 PM »
I actually don't think it's a bad idea. The right one can be leveraged into 2, 3 or more if you play your cards right.

Plan long term, think about features that may not necessarily be right for you, but for future tenants too if you plan on living there short term.

I started my property "journey" at 24, I wish I started at 20.

KBecks

  • Handlebar Stache
  • *****
  • Posts: 1341
Re: Investing in property off of cryptocurrency
« Reply #5 on: January 24, 2018, 01:44:17 PM »
Do you have steady income?  Proceeds from your crypto investments may make a great downpayment, but you will need regular income to qualify for a loan.  Talk to a loan officer, it's their job to help with these things. :)

Check out Biggerpockets.com if you want to learn more about real estate investing.

I was not experienced enough to buy real estate at 20.  I bought a house with my spouse at 29.  YMMV.

waltworks

  • Magnum Stache
  • ******
  • Posts: 2727
Re: Investing in property off of cryptocurrency
« Reply #6 on: January 24, 2018, 01:55:34 PM »
I actually don't think it's a bad idea. The right one can be leveraged into 2, 3 or more if you play your cards right.

Plan long term, think about features that may not necessarily be right for you, but for future tenants too if you plan on living there short term.

I started my property "journey" at 24, I wish I started at 20.

There is a difference between being in the right place at the right time (I made something like half a million dollars in RE since 2008 or so, without having any idea what I was doing - a monkey could have made money during that decade) and actually investing wisely/skillfully. Now, I'm not saying that's what happened with you specifically - but the Australian market went absolutely bananas for the last what, 15 years or something? That won't last forever, nor will it probably be repeated if our OP throws all his money into RE randomly.

RE is not a sure thing. And it's almost certainly a bad idea for a 20 year old college student. Now, it's better than heading to Vegas and putting it all on black (can you actually do that?) or throwing wild parties for half the campus until you graduate, but it's probably not an ideal way to invest, either.

-W


Rich on Money

  • 5 O'Clock Shadow
  • *
  • Posts: 23
  • Location: Seoul, South Korea
  • I'm a blogger and real estate investor.
    • Rich on Money
Re: Investing in property off of cryptocurrency
« Reply #7 on: January 25, 2018, 04:36:05 AM »
I wish I had thought thought about investing in real estate when I was your age.  I'm 43, and have a substantial amount of paid off real estate now, but I would have been WAY better off had I started investing early.  The key, however, is investing responsibly and buying rental properties that cash flow well.  You have to do some math before you buy to figure this out.

Cash out of the cryptocurrency and never look back, take that money for a downpayment and buy a duplex.  Live in one side, and rent out the other.  You could also rent out other rooms in your side to even make it a better deal for you.  This is called househacking.

Of course, before buying, you'll need to read up on some real estate blogs and books, and find a mentor, but I think it's a GREAT idea to buy a house.


coopdog

  • 5 O'Clock Shadow
  • *
  • Posts: 59
Re: Investing in property off of cryptocurrency
« Reply #8 on: January 25, 2018, 04:41:02 AM »
I agree with Rich.

How much school do you have left? Buying a house (or duplex as mentioned above) and renting out the extra bedrooms is not crazy at all. What's crazier is leaving over $100k in paper profits in crypto in my opinion.

Go to a couple different local community banks and talk to their loan officers. Last bit of advice, try to find renters where the rent check comes straight from their mom & dad. Otherwise, you will hear every excuse known to man why they don't have rent on time.

former player

  • Magnum Stache
  • ******
  • Posts: 3307
  • Location: Avalon
Re: Investing in property off of cryptocurrency
« Reply #9 on: January 25, 2018, 05:24:25 AM »
The one factor I don't see mentioned yet is geography.  As a student aged 20 I had no idea where I would end up, and in fact lived in 5 different cities between the ages of 20 and 25.  Owning property in the first of those cities would have been a serious drag on my life choices in the next few years.

If you are certain that the city you now live in will be city you will stay in for the minimum period for which it makes financial sense to own property (remembering that property is highly illiquid, often difficult to sell and subject to long swings in financial value which are outside the property owner's control) then buying is a possibility.  If you think you may be moving around, having the financial and practical obligations tying you to a place you want to leave behind with your student years would be a bad bargain for you personally, regardless of the finances.

midwesterner1982

  • 5 O'Clock Shadow
  • *
  • Posts: 33
    • Follow the link to open a Personal Capital acct and we both get $20 Amazon Gift Card!
Re: Investing in property off of cryptocurrency
« Reply #10 on: February 05, 2018, 02:13:41 AM »
I'm with Marty, Rich, & Coop on this one.  I have a friend who started buying properties when he was 20 yrs old while I started buying at 30 yo.  Flash forward to today and my friend is a millionaire while I am not (yet).  My friend was an electrical apprentice so he had steady income while I went the 5 yr college route.  I wish I had started at 20 yo.  Congrats and best of luck to you either way!

For financing, look for a cosigner to help you qualify.
Another idea is to find someone (parent, aunt/uncle, neighbor) to partner with that could make a return for a few years until you could buy them out when you leave school.  Think about the current market conditions, I'm sure there are lots of folks in your circle looking to take some $ out of the stock market for a short term, stable investment.  Could be a win-win for both of you.
« Last Edit: February 05, 2018, 02:29:26 AM by midwesterner1982 »

Villanelle

  • Handlebar Stache
  • *****
  • Posts: 2159
Re: Investing in property off of cryptocurrency
« Reply #11 on: February 05, 2018, 02:50:24 AM »
Many people probably wish they had started real estate investing at 20.

Those same people likely would have done about as well had they started investing in equities (mutual funds) at 20.

The key is to start investing early, not to start investing in real estate early.  And given where you are in your life and the likely inherent uncertainty, putting your money somewhere not very liquid and that requires work (and additional cash if necessary) on your part seems far less sensical than just dumping it in a basic mutual fund set up.

You probably don't know where you will live, or to some extent even how you will live (pets, spouse, etc.) 3-5 years from now.  So to me, the much better play is to cash out those bitcoin profits ASAP, and put that in a Vanguard or similar fund portfolio.  If you want to keep it simple you can use a target date fund, or just google a three fund portfolio and go with that.  That's so much better than ending up trying to do long distance landlording in a college town where there tends to be lots of turnover and lots of not-ideal tenants.