How to Invest in Real Estate at a Young Age
And Grow Your Financial Future
Meet Zach Shwartz
Zach Shwartz is an independently owned and operated HomeVestors® franchisee and the Vice President of Premium Properties, Inc., a multimillion-dollar real estate investment company that buys, renovates, and sells houses in the greater Boston area. He’s also an active partner with Discover Properties and Impact Realty—two firms that focus on acquiring and managing multi-family properties. In 2017, he closed 23 contracts. But, this year his investment company is expecting to double that. Considering that he just started buying investment properties in 2014, his track record is pretty impressive. Even more remarkable, he’s only 24.
Like me, most people come to realize the advantages of real estate as an investment after spending a little too much time spinning our wheels at jobs we don’t like. Eager to switch gears—and careers—we jump ship in an effort to regain some control over our time, our income, and our lives. Few real estate investors start as early as Zach did and even fewer have known the kind of success that Zach has. So, curiosity got the better of me. One afternoon, I gave him a call to ask why he chose this career path, how he got started, and what the secrets to his success might be. Though he was headed out to sign another sale agreement, he took the time to talk with me.
How to Successfully Invest in Real Estate at a Young Age
It turns out that, originally, Zach was well on his way toward a more traditional career track of becoming a CPA with one of the Big Four accounting firms. He attended Boston University and even did an internship at PricewaterhouseCoopers. While still in school, he partnered with his long-time friend, Tyler, in a baseball recruiting business to gain some experience, make a little cash, and have fun. It was that partnership, and a Bruins hockey playoff game, that would change the course of his career—and life.
“We were at the game with my friend’s dad, Bob, who was talking about how he dabbled in real estate. He had been looking at real estate opportunities for a couple of years and recently talking to a HomeVestors® Development Agent in the Boston area about buying a franchise. But, he said he couldn’t really commit full-time. So, he suggested we take a look at the franchise information to see if it was something that we might be interested in doing after college.”
Not only were they interested, Zach and Tyler were eager. So, the pair partnered again and opened their first HomeVestors® franchise in 2014—two years before graduating college. Investing in real estate part-time in order to accommodate rigorous school schedules, they were able to buy four houses their first year and eight houses the next. Still, when Zach was offered an accounting position at PricewaterhouseCoopers, he took it. He says, “I simply wanted to cross it off the list and make sure it wasn’t something that I wanted to do.”
But, by summer’s end, he was back in action and investing in real estate full-time. He adds:
“I really fell in love with residential real estate investing and the HomeVestors model. Obviously, there are plenty of job opportunities in Boston. But, while working for yourself has its challenges, it also has benefits. As a HomeVestors® franchisee, I was involved in all aspects of the business from the get-go—even when I was still in college. If I’d gone to a big firm, or any other job for that matter, I’d probably still be just a cog in the corporate wheel.”
And, Zach’s decision to be an entrepreneur has paid off. By January of 2016, two additional partners joined the team and one year later they were hiring full-time employees. By May 2017, Zach and his partners opened a second HomeVestor® franchise in New Hampshire.
Common Challenges Young Investors Face
Make no mistake, success doesn’t come easy for younger investors like Zach. He explains:
“Of course, the biggest challenge with almost any business is learning. I came with pretty much no background outside of what I learned in college and from some aspects of my baseball recruiting business. So, I really didn’t know anything about anything.”
In addition to the extra steep learning curve, he makes a special mention of three challenges that he, and other young investors, typically face:
Connecting with Homeowners
When you go out on a call at 20 years old—or 24, like I am now—and talk to people who are 60, 70, and 80, they don’t really want to share what’s gone wrong in their life. They hesitate to be truthful because they think you can’t relate. Or, they wonder how you have the funds to buy and think it’s a scam.
The business is very capital intensive. It’s very hard to grow unless you have some significant financial backing. But, most lenders don’t want to finance someone right out of college for real estate buys.
Working with Contractors
Contractors sometimes want to push you aside too, or even try to take advantage of you. If you don’t know what you’re talking about when it comes to the renovation, they don’t take you seriously. They don’t always want your jobs either, because they don’t think you’re going to pay them.
In fact, because of his age and lack of investing experience, Zach has to work harder than older investors to earn the trust of financiers, contractors, home sellers, and just about everyone else. He says, “I have to be the sharpest that I can be, making sure that I know as much as I can about whatever situation I’m in so that people take me more seriously.”
What, then, did it take to become so sharp that Zach and his team could break through these challenges and build a multimillion-dollar real estate investing business in such a short amount of time? According to Zach, it took something he was already intimately familiar with: being a good student. “We tried to be a sponge and train any possible way we could. We also met with our HomeVestors® Development Agent many times to go over pretty much anything. I probably called him three times a day in the beginning.”
But, Zach also took the time to get the word out about what he was doing and to network. He utilized several uncommon real estate investing marketing ideas, like updating family and friends about his projects through Facebook, and joined the local Chamber of Commerce. He stayed in touch with other regional HomeVestors® franchisees and attended every mid-year summit and year-end convention. He also made the effort to develop relationships with local banks and other financiers, noting that this was a critical step toward financing early deals.
“We were lucky that we developed relationships with different banks early on. As a result, we were able to get investor loans. Now we’ll use a little bit of everything. Sometimes, we pay for properties in cash, use hard money, or go to family, friends, and former business associates. It runs the gamut.”
So, just as it is with older real estate investors, like me, it appears that the secret to overcoming most obstacles and increasing your chances for success lay in building and maintaining the right connections.
Strategies for Starting and Scaling Your Investment Business
Other than getting the right amount of training, having an investing mentor, and networking with other, more experienced colleagues, I wondered if Zach had suggestions that could help other young would-be investors get started with a career in real estate investing. For example, two strategies that are often recommended are “house-hacking,” or buying a multi-family property and living in one unit, while renting out the rest, and the “live-and-flip,” which involves being an owner-occupant during the renovation before selling. On these startup investment models, he didn’t hesitate:
“Both house-hacking and the live-and-flip are great, especially for younger investors. But, the problem you come across with these strategies is that you can’t really scale your business that much. It’s a great way to raise capital, but it takes longer. When we first bought our HomeVestors® franchise, we wanted to scale quickly—and we did.”
On that note, he adds that having the backing of an established business model that a HomeVestors® franchise provides was integral to helping him and his team meet their challenges and realize their potential.
“We had no real estate investing background. So, the training we received and the franchise support system was very helpful. The network of other HomeVestors® franchisees, Development Agents, Regional Business Directors, and anybody at corporate is always willing to help. Plus, there’s the credibility behind the HomeVestors name. Everybody in the Boston area has seen the ‘We Buy Ugly Houses®’ ads. When we go into a home, people feel they already know us and that we’re with a well-known, reputable company.”
And, finally, Zach recommends that young investors be open to learning from their mistakes, taking on projects to simply gain experience, and just riding the rollercoaster. “This business has its ups and downs. If you don’t stick with it through the downs, it’s never going to be rewarding. But, if you do stick with it, you’ll have a much better chance at being successful.”
Get a Head Start on Growing Your Financial Future
Of course, if you start investing in real estate at a young age, like Zack did, you’ll also get a head start on growing your financial future. With time on your side, there’s room to make—and learn from—mistakes, as well as to choose the kind of deals that’ll fast track your knowledge and experience. Then, before you know it, you’ll be an old hat at riding the investment roller coaster, like I am, but with many more years ahead of you to realize your potential. It’s never too late to start investing in real estate, and it’s never too early to succeed. And, HomeVestors can help you get started.
If you’re curious about investing in real estate, don’t let age or experience stop you. Contact HomeVestors to discuss becoming an independently owned and operated franchisee like Zach.
Each franchise office is independently owned and operated.