Why You Should Invest in Real Estate, Even If You’re Young
It is a common misconception that in order to invest in real estate one has to be very wealthy and an accomplished major investor. This is definitely not the case. To become a successful real estate investor, it just takes common sense and a lot of research. Investing in real estate is pretty accessible even for young beginners.
Real estate investments come in so many different forms and with so many benefits. A great advantage of real estate investments is that land and real estate are always worth something. In fact, the value of real estate tends to increase over time: buildings and even the land they are on will keep increasing in value over the years.
James Chen writes that one of the most important ways to make money in real estate is to become a landlord. However, this is just one of many countless possibilities. Another way is to become a pinball machine, or someone who buys undervalued homes, fixes them, and sells them for a profit. A third great option is to invest in Real Estate Investment Trusts (REITs), which allow exposure to real estate without worrying about owning, operating, or financing real estate.
Vanessa Nirode wrote an article about why you should invest in real estate. One of the main reasons behind Nirode is that investing in real estate is far more profitable and reliable than investing in the stock market. According to Nirode’s research, a single-family home can offer an annual return rate of around 9% – difficult to achieve with stocks. Another reason she points out is that while inflation affects any investment, real estate is almost always in demand for what allows it to “maintain its monetary power”. The best part is that there are so many different ways to invest in real estate.
Some of the real estate opportunities Nirode lists are the ability to buy your own home, buy and renovate an upper, rent a home, offer a lease option, or invest in a REIT. Again, a great thing about investing in real estate is that regardless of your level of involvement, it is very easy to find a convenient way to get involved.
Andrew Beattie also wrote an article on the different ways to invest in real estate. One thing that Beattie turns out to be a huge benefit is that aspiring homeowners can use leverage to buy real estate. Leverage refers to the use of debt or borrowed funds to increase the return on an investment or project.
Not only is there a way to become a landlord or turn a house around, but there is also a way to make money from real estate: investment groups. Real Estate Investment Trusts (REITs) are basically dividend-paying stocks, and as mentioned earlier, it’s actually more reliable than investing in the stock market.
It is all the better to invest in real estate, as it is also very accessible to young people. Paul Esajian wrote an article on how to make investing work at a young age.
Esajian first assures his audience that while it may seem difficult to become a young investor, “it is not impossible”. It is important to know that investing successfully in real estate will not be easy. It will take a lot of time and research. The benefit of such a young age, however, is that if done correctly it can be the first step in preparing for long-term success.
The past has shown that real estate is a highly profitable investment option. Being a young investor can be a bonus as it allows for a degree of flexibility in deciding on an investment strategy. Esajian says young entrepreneurs have the chance to build equity by starting to invest in real estate early in their lives. He says that a person who treads this path at a young age paves the way for future high quality portfolios. Starting this early means you could have the chance to build a lifelong network.
It may seem difficult or even financially unrealistic to become a young real estate investor. However, success as a young investor relies on a willingness to learn the best ways to “work with what you have”. Esajian talks about three different strategies.
The first of these strategies is house hacking. This refers to renting an available bedroom in a property you own – for example, owning a two-bedroom house and renting one of the rooms to someone. The second strategy is to study apartment buildings. The point here is to buy an apartment building and rent out the available units. The third option Esajian writes about is wholesale. Wholesale means finding good real estate, signing it, and then transferring that contract to a buyer. The profit results from the contract fees.
Becoming a real estate investor at a young age comes in many different forms and has many advantages. Perhaps one of the best, however, is the fact that a young investor has the time to get into the industry and at their own pace.
When it becomes difficult to find a way to start the journey, joining local networking groups is a good place to start. As Esajian writes, “Focus on building lasting relationships with other real estate professionals.”
Learning how to invest in real estate is not an easy task. It will take a lot of time and energy. However, this is true regardless of where you are in life at the beginning of the journey. With this in mind, one should never be deterred from investing at a young age as the potential challenges do not outweigh the benefits of success. Rather than being afraid of being too young, an entrepreneur should learn to use their age to their advantage and build their portfolio as quickly as possible.