Investing in real estate in your 20s may sound crazy to most people. Most young people in their 20s are thinking about how to find a good job and build their careers and not about how to end it. When you are young, the last thing on your mind is retirement. When you are in your 20s, you also tend to have more money than what you actually need. However, most people have the notion that at this age you are still too young to start investing in real estate. The idea that you could invest in real estate in your 20s may seem impossible to some. Nevertheless, investing and making money in real estate in your 20s is not only possible but also one of the most significant decisions you can make for your financial future. Most real estate investors often wish they could have started earlier.
Why You Should Invest in Real Estate in Your 20s
Investing in real estate in your 20s has numerous advantages. Here are some of them:
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Helps you build an early safety net.
In the modern age, there has been less job security and more uncertainty for most people. More than ever, it has become important to have multiple streams of passive income that can be of assistance in times when things aren’t so clear. Investment in real estate will provide you with income so that you don’t have to worry about relying on your savings or being stressed about careers and jobs. Real estate provides greater financial security since it provides passive income despite your status of employment. Having a job will provide you with extra income which you can use to grow your investments, save, or add to retirement funds.
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You have more time to build your wealth.
It is always recommended to invest as early as possible since growing your investments in real estate and tapping into your true potential is going to take time. For you to maximize your wealth, you will need to start as soon as possible. Investing in real estate in your 20s will give you more time to learn, grow, and perfect the art of real estate investment. Moreover, you will be able to benefit from appreciation especially when it concerns rental properties. In the buy and hold strategy, holding the property for longer increases your chances of earning more profit when you sell the property in the end. Cash flow also increases with time since inflation usually drives up rental prices, thereby increasing the profits. Holding an investment property for longer makes it more likely for you to complete mortgage payments on it earlier and earn more.
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You learn other life skills
Investing in real estate in your 20s will require determination, good communication, patience, problem-solving, and other life skills that you will need in other areas of your life. Money is not the only important factor in real estate investment. Learning other life skills early on will be very helpful to you throughout your life. You will also learn to evaluate things differently.
Related: 5 Skills Needed For Real Estate Investing
How to Start Investing in Real Estate in Your 20s
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Prioritize investment in properties
Most people often feel accomplished when they own a home. However, it may be prudent to continue renting so make your first purchase in real estate be a rental property. By doing so, you will be buying not only for cash flow but also for appreciation. Your investment begins to pay off straightaway, and as your investments continue to grow and improve your financial security, you can now buy a home.
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Learn from real estate experts
Even though sometimes you may feel like you know everything you need to know about investing in real estate in your 20s, it is important to admit that you don’t and instead lean on the insight of those who have been there before you, done it, made mistakes and learned better. Making unnecessary mistakes in real estate investment can make you lose a lot of money. Do your homework and find a good mentor and learn from other real estate experts. Speak to people who started real estate investing earlier.
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Start Saving
Any investment is going to cost you money. The chances of you succeeding in investing in real estate in your 20s will increase if you start saving money early enough. Know how to manage your expenses, cut back on unnecessary expenses, and have good saving habits. The earlier you begin saving your money, the earlier you will begin investing in income property. If you save enough money within a certain period of time, you will be able to raise the first down payment.
Related: How to Start Saving Money to Become a Real Estate Investor
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Make the right use of your time
Time usually flies in just a blink. Being young and in your 20s doesn’t mean that you won’t get old soon and that you have a lot of time to waste. You should be using this time to make plans for your future, learn, and start investing. Your 20s is the best time to start investing and build a good foundation for your future. You shouldn’t be wasting your time doing things that won’t have a positive impact on your future.
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Start networking
Networking is one of the most significant aspects of investing in real estate, just like in other businesses. Whether you are just starting out or already in business, you should learn how to network. You can begin this journey by attending local events like workshops, seminars, and open house events so as to make yourself seen. With the technology we have nowadays, social media has also become one of the most convenient methods of networking.
Related: How to Build and Maintain a Real Estate Investment Network
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Educate yourself
Investing in real estate in your 20s won’t just come easy. You need to put in the effort and start educating yourself on how to start investing in real estate and grow your business. You need to be aware of the current housing market trends, customer habits, demand, investment property mortgage rates, and other factors that have an influence on real estate investing. Teach yourself how to perform real estate market analysis, find real estate comps, and learn all about investment property analysis. You need to educate yourself on how to make money in real estate. With such education, you will be able to know how to make the best real estate investments and maximize on your return on investment.
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Maintain a credit history that is clean
Access to credit is important in buying an investment property. To maintain a clean credit history, you need to pay your bills and loans in time. In situations where you are unable to make the payments needed, you can make other arrangements with your creditor. If you don’t put in place alternative arrangements, a creditor may decide to lodge a default against you if you don’t honor your payments within 90 days. This may have a negative impact on your credit history.
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Start Small
Many beginner real estate investors get overexcited and try to shoot for the stars on their first real estate investment. It is important to start simple and small and gradually grow your real estate portfolio so that you don’t end up overwhelming and discouraging yourself. You can consider starting out with a single-family home or a one-bedroom apartment as your first real estate investment. Another option to get started would be to rent out a portion of your own home and earn some extra rental income. With time you will have multiple investment properties.
For young people who may want to start investing in real estate in their 20s, you really shouldn’t have anything to be afraid of. With ambition, enough information, the right networks and mentors, patience and hard work, age doesn’t matter in your journey to real estate success. However, the earlier you start, the better for you. With all the benefits of starting your investment at a young age, investing in real estate in your 20s will be a decision you will never regret. Mashvisor provides you with must-have real estate investment tools that will help you start investing in real estate in your 20s. Check them out here.
