Make Investment In Real Estate In Your Early 20s
Wednesday Dec 04th, 2019Share
Making an investment in the real estate business at a young age is risky, especially when you are in your early 20s. To reduce the risk associated with real estate investing and to make the most out of your investment, it is crucial to leverage educational resources, get in touch with professionals, to look for a good loan deal.
So, if you are thinking about investing in real estate in your 20s, we have come up with some useful tips to help you invest right and get profit during your prime years.
01 – Educate Yourself
First and foremost, you need to do research about property prices, government charges, and land tax. Young investors must be familiar with property investing and real estate markets. There is plenty of information available on the internet today that you can use. But it is recommended to visit real estate markets to know the accurate details of a property.
Real estate experts advise that young investors need to understand how budgeting and personal financing work. They also need to learn how to inspect and value properties.
02 – Seek Advice
Speak to the local agents and brokers to understand the real estate market. With the help of a professional, you can come up with a ‘checklist’ of the property and market features needed for your investment. You can seek advice from different real estate professionals, such as - mortgage broker, property manager, accountant, financial planner, and accountant. You will need to pay someone to teach you all the real estate tactics, but it’s better than buying the wrong property or failing in the initial stage.
03 – Save Early
One of the most common drawbacks of being a young investor is not having enough capital. So, if you want to invest in the property business, you need to start saving early. Use these strategies to increase your capital – house hacking, multifamily rental property, and wholesaling.
You need to make as many deposits as possible in your bank account so you can show it to the lender than you have financial discipline.
04 - Consider Borrowing Options
Being a young property investor, you may need to find one or more co-borrowers to share the financial burden with you. This can be the best solution if both of you share the same goal and have similar economic circumstances. You two will share the cost of ownership as well as the loan cost.
Not only that, the co-borrowers will also share additional costs, including legal charges, stamp duty, strata fees, and ongoing expenses (such as repairs and maintenance).
However, this also means that you’d be responsible for the other borrower’s debts if they can’t meet their repayments, so you need to make sure that complete paperwork is done and legal documents are in place.
05 - Shop Around for a Competitive Loan
When it comes to the investment loan market, it is highly competitive. Therefore, you can find a mortgage with different features like the ability to make additional repayments, offset account, minimal ongoing fees, and a redraw facility.
Finding a home loan with such features will mean that you can lower your interest charges and mortgage repayments. It will help you focus on repairing your credit and achieving your investment goals faster.
For instance, if you have a $350,000 mortgage at 5.5% interest over 30 years and you decide to start contributing an offset amount of $2,500 in the fifth year, you will save a total of $7,268.28 and chop four months off your loan term by leveraging an offset account.
Challenges That Young Property Investors Face
There are numerous obstacles that prevent young investors from entering the real estate market. Some of them are:
- Lack of disposable income
- Poor financial discipline
Mistakes That Every Young Property Investor Make
Here are some of the most common mistakes that every young property investor make. If you want to have a profitable outcome, you need to avoid the following errors.
- Lack of research and knowledge
- Not saving early
- Buying emotionally
- Property investing is for cashed-up baby boomers
- Not thinking long-term
- Buying only based on price
- Buying for cash flow
- Not reviewing property portfolio
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At DanieleSica.com, we have a team of experienced and professional individuals who ensure to provide you the best real estate services. Reach out to us anytime for all kinds of real estate advisories.