Millennials are now the largest generation in the labor force, with many of them still in their 20’s. Being relatively new to the employment scene sets them off to a series of expectations that give them a considerable amount of responsibilities as young professionals.
However, many of them lean towards enjoying the life of a first-time employee above anything else, so they spend much of their wages on personal expenses. This may be a common occurrence, but there are a few who think ahead and start early by investing their money in more important matters, and one of them is real estate.
Millennials and real estate investments are two subjects that aren’t usually talked about in the same conversation since young professionals seem to be under the impression that investing in real estate is something you do when you’re older.
It’s hard to argue with this rationale since many millennials have the desire to enjoy the fruits of their labour. Then again, it’s never too early to delve into the idea of investing into real estate.
What many millennials don’t know is that real estate can be time sensitive, so starting early is more beneficial when planning for investing long-term since the value of properties appreciate over time. This may seem daunting for many, but it’s not impossible to be a condo owner in your 20’s. If you need more reasons to convince you, here are some that just might draw you in.
- Paying a mortgage is better than paying rent
If you’re shelling out money for rent, there is no doubt that a mortgage is better since you know your money is going to property that you will be owning once you’ve paid it off instead of just being a tenant.
- Starting early is the most ideal time
You can take advantage of low prices while learning how to manage your finances wisely early on in your career. Starting early also helps you achieve your goals faster so that you can own property at a younger age.
- Banks trust you more
If you were fortunate enough to be granted a housing loan and have been making payments religiously, banks will definitely put more trust in you in case you need to apply for another loan for whatever reason.
- It can be a hedge against the market
Stability is the name of the game when it comes to making investments. Unlike the volatility of the stock market where a great day at trading could be followed by a disastrous tailspin, real estate offers a layer of insulation against market crashes.
- You can boost your cash flow
Once you have property you own, you have the option to rent it out so that you can have a steady supply of income to add to your salary. In the case of house flipping, you can profit once you sell it.
If you want to invest in a property for buy to let purposes in order to make a secondary income stream but are concerned that you don’t have the time to allocate to handling tenant issues and day-to-day errands that might arise, you could opt for a rental management company to handle this on your behalf.
RWinvest state in their guide to property investment that “many property investors don’t have time to take on this role, which is why rental management companies are so popular”.
These are excellent reasons why millennials should invest in real estate as soon as possible. To make sure you are confident in taking the big step, here are tips that can help you with your decision.
- Do your homework
If you are new to this, it is crucial to learn everything about the real estate industry, as well as all the ins and outs of it before diving in. At this stage, you can find out the details about what it takes to own one, and at the same time, determine the steps you need to take so that your finances can cover the costs.
Coming into this prepared and armed with the knowledge can save you from making a wrong decision that you might regret in the long run. You have to remember that this is an investment that would bind you for the long term, so it would always be best to know what to do.
- Learn from those who’ve done it
They say experience is the best teacher, and it’s hard to argue against this adage. Part of knowing the ropes is consulting folks who have gone through the process, so you could use their experience by applying some pieces of their advice to make your venture more successful.
Seek out those who have also started investing at a young age. They can give you a realistic view of the financial journey you will be embarking in while having an idea on all the sacrifices you need to make and at the same time the rewards you will be getting out of it.
- Save smart
When you’re still in the early stages of your career, it’s more common to apply for loans to finance your real estate investment. This is nothing to be concerned about if you know what you should be doing.
Lenders like banks and other financial institutions will go over your bank records to check if you’ve made consistent savings over time. It’s always a smart idea to get into a good habit of saving from work income even if they were casual jobs. If lenders find evidence that you’ve been quite adept in saving, there is a huge chance you’ll be granted that loan.
To give put yourself in a better financial situation, you must reduce your debts and cut your expenses. And if you need a little financial boost, it’s okay to try asking for help from your parents. They just might offer more than money in terms of making sure your real estate investment stays afloat.
- Build and maintain a good credit history
Paying off your bills and other loans on time is a great indicator that you can handle your finances proficiently. This will let banks or other lending institutions know you deserve to be granted a housing loan. This kind of behavior can take you far in terms of flexibility and teach you to fulfil all your financial obligations.
Once you’ve established and maintained a good credit history, loans will be easier to come by. This will help you diversify your investment portfolio and open more opportunities for you.
- Invest for the long term
If you have set your mind towards owning a piece of real estate property, you must be focused on achieving this goal because unless you have the finances to purchase property in full, this kind of investment will set you for the long term.
Make the necessary adjustments in your lifestyle to make sure you stay on track and never skip any payment obligation. This way, you can focus on your goal and move on to the next if you wish.
Investing in a real estate property at a young age can be alarming for many millennials. But if you think about all the benefits you can reap from starting in your 20’s, all concerns fly out the window.
Just be prepared, stick to the plan, and make those payments. These may seem difficult to execute, but once you’ve conditioned yourself to do what’s necessary to achieve your goal of owning property, it’s going to be worth all the trouble.