Our guru has returned for another Ask Philip segment! You asked questions on Twitter, and Philip Michael gave you his input. Read ahead for advice on buying property in NYC, investing your first $3K and utilizing (or not) your college degree. Check it.
Q. What year did you buy your property? Where is it located? How many units are in the property?
A. I bought my first property in 2016, in April. I no longer have it, but it was in Jersey City, 12 minutes from the World Trade Center.
The reason I went there is because, in my infinite ignorance, I knew nothing about anything that I was doing. So I just stuck to common sense and things that I could understand, and it helped me tremendously. So I’m looking in Brooklyn, which is east of Manhattan. And the farther into Brooklyn I got, it was still expensive. I had to pay around $700,000-$800,000 for two apartments and then a barely livable basement. But if I went west to Jersey City, which is right there, I can get a brand new one with three apartments, three large gorgeous apartments, for $750,000. And it was brand new, ready to go, and I could lease it out. I could learn the process at my own leisure and at my own pace, and it was incredibly helpful. It ended up going up by a substantial amount of money in a very short period of time. So that’s how it went down.
Q. If you had $3K to invest in some stocks right now, who do you like and why?
A. I have to be mindful of how I answer this question because I am not a financial advisor. I am not at liberty to advise you what to do with your money; that’s not my role.
Money is being pumped into the economy, and prices are rising, what that means is $1 won’t have the same buying power one, two, three years down the road. But the numerical value will remain the same. And there’s more in supply, right? So naturally, it’s all going to go up, and the stock market will follow suit. So I would simply put it into ETFs (index funds) that track the economy as a whole. Because if you look back historically, over the past 100 years, the U.S. economy, the stock market has gone up by 10% to 15%, every single year. I think that number is going to be amplified because of the environment that we’re in right now.
Look into it yourself. I’m not telling you to buy it, I’m just saying what I would do. The three main ones that I like and that I’ve bought are SPY, QQQ and VOO. And you can look at the returns over the past five years.
$3,000 is a good place to start. You can let it compound and keep saving up and keep putting money into your investment account. Before you know it, you’ll be in a really good spot. And you’ll protect yourself from the ramifications of too much money being put into circulation without being taken back out or paid back.
Q. I am currently majoring in construction management, as well as planning to get my real estate license in the next couple of years. How can I use this to my advantage for pursuing a career in real estate development? Will this allow me to join the industry with less capital investment by potentially starting out by partnering with a developer?
Your short answer is, I suppose it can help you, yes, because you’re coming in with a skill set that can help a developer. I have a construction management company that is now co-developing with me for that very reason.
But one thing that I will say to you just because you go to school for something doesn’t equate to experience. Experience is always key. I don’t have a college degree in real estate or in finance barely. I went to business school where I learned next to nothing, and it definitely didn’t carry over into what I’m doing now. So experience, being resourceful, figuring stuff out and just getting in the trenches are far more valuable.
No information can hurt you but don’t overdo it, either. I would say don’t get into this whole analysis paralysis type of situation where you arm yourself with so much knowledge but you never actually do anything.
For more money and investing advice from Phil, check this out.