While the prime to invest in real estate was yesterday, the second-best time is today. This is exactly why you should start investing in real estate now. Some real estate experts might advise you to start as soon as you are of legal age – which would either be 18 or 21 in most cases – and make moves that kick-start your real estate career. Here are a few reasons why.
Why Should You Start Early?
As the adage goes, the early bird gets the worm, meaning that you are maximizing your potential and the chances of success if you start something early. The same is valid for investing in real estate.
Many extremely wealthy people saw the potential of investing in real estate at a tender age and are now reaping the rewards. A story that I know of is about a 24-year old who dropped out of college and purchased a 5-bedroom condo for about $60,000. He then rented out four rooms to his friends for $300 a month, letting him live for free while working.
By hard work and persistence, this person kept investing the rent and savings and now has a property worth $4 million, including 42 units.
When you decide to buy your first property, whether it be property to lend out or live in yourself, you would need to work with a lender to obtain a mortgage. This is because most people do not have tons of cash to pay off an entire home in a single payment.
Regardless, the lender will determine if you are eligible for the loan by assessing your credit history, which sometimes isn’t the most impressive for people in their 20s.
The credit rating will decide the interest rate on your loan. Luckily, interest rates have been low for several years, which is why you should get into real estate right now. For instance, a 30-year fixed loan typically has an interest rate of about 4 percent.
Moreover, you will be able to avail the first-time home buyer loan as a young investor, which will lower the down payment and allow you to make more money on your first property.
Benefits of Renting Out your Property
Renting out your property is the main reason why people invest in real estate in the first place. It allows you generate a constant source of passive income while being employed or doing some other business on the side. Rent money is also great for investing back in the business for repairs and damages you may face.
Just one important recommendation from our side, protect your investment with the help of a real estate attorney who can allow you to close transactions and help in other situations.
Buying provides you financial acumen. Apart from making money early in your career, you will also be learning fiscal responsibility at an early age, putting you years ahead of your peers. Your friends probably don’t know a thing about accelerated amortization.
Moreover, working with real estate allows you to learn problem-solving, especially if you are working with tenants. It also gives you the patience and grit to wait out bad deals for good ones. The whole process is enjoyable as well.
It’s never too late to begin investing in Real Estate. Even if you are a 22-year-old or 44-year old, real estate cannot be stolen or lost, which is why it is a worthy investment for the young and old alike. Our advice would be to start looking around your area for decent investments so you can build a portfolio worth millions of dollars.