Episode summary
Helping a 22-year-old buy a house might sound impossible, but when you run the numbers, it’s often easier than people think.
In this episode of The Numbers Show with Max , Max Moore (Co-Founder of Roots Realty Co.) breaks down a real listener’s financial situation to show how a first-time buyer can purchase their first property in Indianapolis right now , not “someday.”
We walk through income, savings, student loans, lending strategy, and a realistic house-hacking plan that turns a starter purchase into a long-term real estate investing runway. This episode is for young professionals, first-time home buyers, and aspiring real estate investors who want clarity, not hype.
If you’ve ever asked: – “Can I afford to buy a house?” – “Should I wait or buy now?” – “How do people my age actually get started?”
This breakdown is for you.
Chapters
Full transcript
Auto-generated from the episode audio. May contain minor errors.
I don't care if you're 45 or 18, you can become a homeowner this year and it might be the best financial decision you ever make. If you don't know who I am, I'm Max Moore, co-founder of Roots Reality Co. and we've helped investors buy 500 homes in the last 3 years. But I bought my first rental at 19 years old and now I'm 25 and I own a total of five properties and I've helped 100 firsttime buyers and investors do the same. I did this all while getting married, having a kid, and running other businesses. By understanding the numbers, using the right lending strategies, and making smart first moves instead of waiting for the perfect. Today, I'm breaking down a real 22-year-old's financial situation. We're going to dive into exactly what numbers matter and how making this first move in real estate is going to be easier than you think. Jumping right in, we just got this email in from a 22-year-old. I'm going to read through exactly what he gave me, and let's break down a situation. Hey, Max. My name is Jason and I'm a 22-year-old who is an avid listener of the pod. Shout out Jason. I just graduated from IU in Bloomington and I'm looking to make my first jump into real estate investing in Indianapolis. I don't know if that's even possible for me, lol. So, would love some guidance here providing you with some initial personal information that will hopefully inform your recommendations. I just started a new job downtown as a financial analyst. base salary 73k living with my parents 20 minutes outside of the city to save some money for a down payment. I have 23k in savings and 5k in an investment brokerage account. I have about 30k in student loan debt and cars paid off, no credit cards, monthly expenses are, you know, pretty meticulous and everything's taken care of. What should my first move be? I'm ready and stoked to move forward. Well, Jason, you're ready to buy a house now. And let me show you how. You're making 73K on that new salary. There's your income money. It's green, right? You've got 20K and savings. You have pesky student debt. Sorry about that. I don't even remember how much it was because I could care less about that. Call it 25K in debt. you're going to pay the monthly minimums on that until it goes away. Uh or get aggressive when you're saving from all that money. Uh and when we're thinking about buying a house, the reason why you're ready is most of my first-time home buyers or investors have about 10K liquid that they're going after. You have 20 and you have no expenses right now. And really, actually, most people have no money coming out of college. So, congrats for you. I'm going to assume that you did some side hustles or kept a job while also getting a degree. Very, very impressive. and then data analytics. Dude, you're crushing life. 10K down on a house. You're you're going to buy a duplex because you want to be able to house hack. You're a young buck. You're just getting into the industry. You're working downtown. You might as well live near where you work, live, and play. I'm assuming you're, you know, probably got some night life going on on the weekends downtown. You're in Indie. Let's get out of your parents' basement. We're going to assume that you're going to use a 5% conventional because you just got the salary. there is a potential that you may need to ask mom and dad to be a co-signer. And in that event, if we're buying a duplex, they would have to occupy the other side of the duplex per FHA guidelines. So, let's just assume 5% down conventional. So, we've got 10K as a down payment, 10 to 20K. We've got 20 bones that we can use, which gives you a range of a purchase price of 200K to 400K. purchase price. What does that look like in Indianapolis? Well, that looks like pretty much any multif family property that's worth living in that's available on the marketplace. It's very rare that you're seeing over 400,000 as a purchase price. In fact, I actually would recommend getting a pre-approval to shop around the 300 range. That's going to put you in a comfortable C plus to B minus area because I get it, like you're young. you're going to be living downtown. We don't need to stretch and put you in a 150k duplex that's going to be scary and intimidating to live at night. We want to put you on like, you know, Churchmen near Fountain Square where it's just going to feel like a suburb town in Indianapolis or like Bates Hendricks would be a great location to move in India as a firsttime house hacker. So, you buy for 325K, assuming it already has a tenant in one side for 1,500 a month. Now, what you're left to pay and what you're left responsible for is a mortgage. You're looking at 2365 per month estimated. And I I want to make something really clear. You're going insured conventional 5% down to get to this payment so that mom and dad don't have to live in the other side. If it's FHA and they cosign, they do. At this 1500 income, 1,500 income, it's green. We like green. 2,300 in the red per month. You are losing $865 per month in a mortgage payment. You're actually just paying $865 to own a $325,000 asset because you're doing what? You're hacking the system. That's why it's a house hack. And what you're going to do is you're going to live there for the next 2 years. So, you're going to occupy the place for two years. And what's going to happen is you are going to be able to save up out of that. You know, we had 73K in salary. So every month, assuming taxes in Indianapolis, obviously it's cheaper. That's one of the reasons why you're probably sticking around in Indie. Um it's you you'll probably be taking home like $4,800ish per month. You're only paying $800 to live. So that means, let's take out utilities and all that. At a conservative rate, you have 22. 5K that you're putting back hay in the barn. That's a lot of money whenever it comes to buy the next one. But you want to reside in this 123 Main Street 325K duplex for at least two years because it's going to help you five years down the road with capital gain taxes. So you're stacking up bread. We're going to put 20% down on your next duplex after 2 years. So this is a 5-year runway. You're going to buy another one. You're going to repeat the process. The payment's going to be even lower because you have more money down. You're going to put stick a tenant in. You're going to start cash flowing 865 bucks a month on property 1. Property two, you're going to break even on the monthly payment and you're going to live there for another 2 years. At year four, you're going to sell property one and get all the cozy appreciation back, which like I don't know, I can just spitball and say you're probably going to end up with a 60k gain assuming you don't do anything in it. Honestly, while you're living there for the first two years, you should be doing things like changing the flooring, painting the cabinets, putting knobs on the counter, uh, or putting knobs on the drawers and the counter. Anything you can do to add to spend a dollar to gain two by adding value is going to be huge. so that you can get a 60k gain over 2 years from property 1 and roll your original down payment and all of that equity, call it like 75K, a year of your salary that you just gained over, you know, doing nothing for four years besides owning a property. So congrats to you rolling that over into a new property with no capital gains tax because in the US if you reside in a home for two out of the last five years you have to stay there for two years which you did you can sell it without the capital gains tax and you can defer that and continue to roll your equity so that when you're 30 when you're 35 you're sitting at a million dollars in a equitable real estate portfolio just by simply moving. Jason, sorry to hit you with so many numbers and agnosium. I'll just be simple, brother. Buy a house. You are ready. You worked hard in college. You got 20k in the bank. Let's go get a house. Turn that into 150k in the next 5 years. Give me a call. And if your name's not Jason and you're not a data analytist in downtown Indianapolis and you know you didn't go to the amazing College of IU Bloomington Go Hoosiers, but you're curious if you're going to be able to buy a house and if you can house hack for the first time, just drop us a comment below and with your situation or email us at HELLO@ROOTSREALTY. CO and maybe you'll be featured on the next edition of the Roots Number Show.
Episode questions, answered
Quick answers from this guide.
How much money do I need saved to buy my first house in Indianapolis?
Max says most first-time buyers he works with have around $10K liquid, which is enough to get started. With $10K to $20K you can cover a 5% conventional down payment on a property in the $200K to $400K range. Having $20K gives you more flexibility and puts you in a comfortable price range without overextending.
What is house hacking and how does it work for a first-time buyer?
House hacking means buying a duplex, living in one unit, and renting out the other to offset your mortgage. In the example Max walks through, a $325K duplex with a $1,500 monthly tenant reduces the buyer's effective housing cost to about $865 per month. That savings lets you build cash reserves much faster than renting or paying a full mortgage alone.
Can I buy a duplex with a 5% conventional loan instead of FHA?
Yes, Max recommends a 5% conventional loan for buyers who have a qualifying income and want to avoid FHA restrictions. The key FHA restriction he flags is that if a parent co-signs an FHA loan on a duplex, the parent must occupy the other unit. Going conventional lets you avoid that requirement entirely.
How do student loans affect my ability to buy a house?
Max treats student loan debt as a manageable monthly expense rather than a dealbreaker. His advice is to pay the monthly minimums and focus on accumulating enough savings for a down payment. In Jason's case, $30K in student loans did not prevent him from being ready to buy.
What neighborhoods in Indianapolis are good for a first house hack?
Max specifically mentions Bates Hendricks and the Churchman area near Fountain Square as solid starting points for a young house hacker. He describes them as feeling suburban while still being close to downtown Indianapolis. He advises against stretching into a $150K duplex in an area that feels unsafe to live in at night.
How do I avoid capital gains tax when I sell my first house?
Under U.S. tax law, if you live in a home for at least two out of the last five years, you can sell it without paying capital gains tax on the profit. Max's strategy is to occupy the duplex for two years, then sell and roll the equity into the next property tax-free. This lets you compound your gains without giving a cut to the IRS.
What is the 5-year real estate runway Max describes for a young buyer?
The plan is to buy a duplex around $325K with 5% down, live there for two years while saving aggressively, then buy a second duplex with 20% down. After year four you sell the first property, capturing appreciation and any forced equity from light renovations, potentially netting around $60K to $75K tax-free. That equity rolls into the next purchase, building toward a seven-figure portfolio by your mid-30s.
What small improvements can I make to a duplex to increase its value?
Max suggests low-cost cosmetic upgrades like replacing flooring, painting cabinets, and adding new drawer and cabinet hardware. The goal is to spend a dollar and gain two dollars in value. These types of improvements, done while you are living in the property, can meaningfully increase your sale price when you exit after two years.