I get it—homeownership seems impossible when you’re just starting college. But I promise you, it’s doable. I know because I did it. By following this exact strategy, I landed my first property when I graduated in 2023, arguably one of the worst times in real estate history. High interest rates, low inventory, insane bidding wars—you name it, I faced it. And yet, by using REITs as my stepping stone, I still made it happen.
Step 1: Establish Your Financial Foundation
Most students focus solely on their studies, but if you secure a steady income—through internships, part-time jobs, or full-time co-op programs—you can begin building wealth early. Let’s assume you earn approximately $45,000 annually from internships and part-time work. While covering your essentials, commit to saving and investing a substantial portion of your income.
Budgeting for Success
- Live like a student: Minimize unnecessary expenses—choose affordable housing, cook at home, and avoid lifestyle inflation.
- Save aggressively: Aim to save at least 40-50% of your earnings while keeping living expenses low.
- Avoid bad debt: Use credit cards responsibly and avoid high-interest debt that could hinder your investment goals.
Step 2: Invest in REITs for Growth
Since you likely won’t have the capital to buy a property while in school, the next best thing is to invest in Real Estate Investment Trusts (REITs)—companies that own, operate, or finance real estate. REITs allow you to benefit from real estate appreciation and rental income without actually owning property.
Why REITs?
- Liquidity: Unlike physical real estate, you can easily buy and sell shares in REITs.
- Passive Income: Many REITs pay out high dividends, which can be reinvested for compound growth.
- Diversification: Investing in different types of real estate (commercial, residential, industrial) spreads risk.
My REIT Investing Strategy
This wasn’t just some theory for me—I actually did this. I set aside about $1,000 a month into a mix of REITs, always reinvesting the dividends. I watched my portfolio steadily grow over the years, even when the market wobbled. By the time I graduated, my REIT investments had grown to around $50,000, enough for a down payment on my first property.
Step 3: Cash Out and Purchase Your First Property
Upon graduating, it’s time to make your move. Sell your REIT investments and use your gains as a down payment on your first property. With $50,000+ saved, you can afford a property priced around $250,000 to $300,000, assuming a 20% down payment.
Choosing the Right First Property
- Look for undervalued markets: Consider cities with strong job growth but lower real estate prices.
- House hack: Buy a multi-unit property or rent out extra rooms to cover mortgage payments.
- Think long-term: Focus on properties with strong appreciation potential and rental demand.
Step 4: Build and Scale Your Real Estate Portfolio
Your first property is just the beginning. With rental income covering your mortgage, reinvest your savings and future earnings into acquiring additional properties.
Next Steps After Your First Purchase
- Refinance and reinvest: Use equity from your first property to buy more real estate.
- Continue saving and investing: Even as a homeowner, allocate funds to REITs or other real estate ventures.
- Expand strategically: Scale your portfolio over time by acquiring rental properties with positive cash flow.
Conclusion: From Freshman to Landlord
I know this works because I lived it. I graduated in a tough real estate market, but I still made it work. The key is to start early, be consistent, and take advantage of every financial opportunity available.