If you are asking yourself the question, when should one start investing in real estate, we have a definitive answer.
The truth is, it is never too soon for a young adult to begin investing in real estate. And this does not simply mean acquiring a primary residence for which you are listed on the deed (along with your lender). Rather, we mean that those investors wondering when to start investing in real estate should start as soon as possible.
Investing in real estate young has many advantages. Whether as a sideline, or as a primary profession, becoming a real estate investor offers not just financial gains, but also a lot of life lessons that will help you in any career. Becoming a real estate investor is not just for those of us who have reached middle age. Ask any real estate investor you meet if they think real estate investing in your 20s is a good idea. Be prepared to listen to some sound advice on why you should start investing in real estate now.
Young Real Estate Investors – Why They Have Advantages
Let’s set aside any shop talk for a moment and just get down to brass tacks. There are exactly two main ways to make money in the real estate business. The one most often discussed here at Mashvisor, where we serve the rental property investor, is rental income. That is the primary source of cash flow for any real estate property business. You can’t succeed without this income source, but it is only part of the equation.
The second way to earn money in real estate is also significant. By increasing the equity value of your portfolio over time at a rate higher than inflation. Called passive profits by some, this is far from a passive activity. Most property will not beat inflation if left alone. Only through your hard work building equity by maintaining and improving the property in a well-chosen neighborhood will your holdings gain value. The improvements to your investment property and the improvements (hopefully) to the neighborhood can only happen over years and decades. To capitalize on this important source of financial gain, you need to start investing in real estate. So invest in real estate in your 20s. Don’t wait until later. You are likely never going to have more energy, stamina, and risk tolerance to start investing in real estate than when you are a young man or woman.
Investing in Real Estate Young – One Unique Advantage
As a person who is on their own and ready to move from a rented apartment to a property one owns, you have a huge advantage. It’s one that young real estate investors have long used to start building a real estate portfolio. That is the owner-occupied multi-family property. Scan Mashvisor’s top stories and you will soon see that this is a hot topic.
Buying a rental property at a young age can be a challenge. You usually have little capital to put down. Lenders also don’t want to talk to you because you have no track record. You have no rent roll income to show. Why would they want to lend to you? However, if you can find a multi-family property, say a duplex, or a three-family house, there is a well-defined process to break into real estate.
You buy the investment property using a low-interest, low down payment, government-backed FHA loan. The loan has some conditions. The owner must live in one of the units and hold it for a couple of years. You are going to do that anyway. You need to live someplace and moving more than once every few years is very expensive. If you are investing in real estate young, the owner-occupied multi-family strategy (also known as house hacking) is a formula for success.
How to Invest in Real Estate
In case you missed the theme of our story, start investing in real estate when you are young. Do you have to invest in real estate in your 20s? Heck no. Let us emphasize that people can invest at any age. There are no age restrictions in real estate. If you are in the military, still in a school program, or if you have just had your first child, finish up your priorities first. However, don’t keep telling yourself that your lifestyle prohibits investing in a rental property. Although there is certainly a time investment, most of the time-consuming work is up-front.
If you are reading this in your 30s, 40s, or 50s, or even later, don’t quit on the idea of investing in real estate. Many successful investors have second careers in rental property investing. You may not have as much time on your side as someone a bit younger, but you do have a lot of time. And you have wisdom. And likely more capital than a very young investor. Focus on your strengths and start investing in real estate.
Start investing in real estate by taking the first step. Begin your property search now.
How Old Do You Have to Be to Invest in Real Estate?
The answer to this question is simple. Old enough to legally get a bank loan to finance an investment property. 18, 21, or a bit older in some areas. Barring that reasonable barrier, getting started in real estate investing is restriction-free in terms of age. Start investing in real estate now if you have been considering it. Waiting for “market conditions” or a better financial situation before you start investing in real estate can cost you time.
Author’s Personal Note
As a rental property real estate investor who started in his 40s, I often wish I had started sooner. Like many people, I had a time-consuming career as a young businessman in another industry. Looking back, I realize that I had opportunities to build a real estate portfolio sooner that I let slip past. Once I did jump into real estate, I learned my lesson and began thinking young. I even named my business after my two young sons. Whenever possible, I take them with me to view potential investment properties, to condo meetings, to meetings with realtors and property managers, to meet with tenants, to do minor repairs and inspections, and I put them to work using their own hands. My hope is that they will see how to start investing in real estate young by showing them that it is not a scary process.
Start investing in real estate as soon as you are able. You are not alone. You can leverage your real estate network and Mashvisor has many of the tools you need to tackle each and every step. Check out what Mashvisor has to offer. There is no better time than the present.