10 Best Real Estate Investment Strategies (or Tips) for Millennials5 min read
The COVID-19 pandemic and WFH regulations have sparked the appetite of millennials to invest in properties. Considered one of the most conscious savers across generations, millennials realized the importance of getting a living space apart from the family homes built by their parents.
But given that most millennials are still in the early stages of their professional career, these future homeowners need to find a way to decrease the risks of buying a property.
If you belong to the millennial generation, you may want to consider these vital questions. How can you profit from your investment? How can you ensure the practicality and usability of your property in the long run?
Know the answers to these questions as you read our 10 best real estate investment tips for millennials.
10 Best Real Estate Investment Tips for Millennials
List your goals
If you’re planning on making a real estate investment, first determine your goal. Is it to earn passive income? Perhaps you want to have extra earnings while holding a full-time job? Do you want to wait for your property to increase in value in the future? Or, are you looking forward to simply having your own space to live in?
Whatever it is, determining your goal can help you decide on the location of your future property and narrow down your choices on the type of your dream home.
Find properties with a high-appreciation value
Properties are imperishable assets, so their value may increase over time. You could even leverage the potential appreciation of your property if you invest early. You’ll see a rise in your ROI as the market demand for properties grows.
High-value properties can also increase your equity — which is the value of the interest you have in your home —promoting financial security in the long run.
Aside from time, other factors that may determine real estate appreciation include the location, area development, population, economy, and community. Selling a property after it has appreciated can give you a high ROI that exceeds what you have initially spent.
Define the market you want to penetrate
Given the vast array of properties you can choose from, it is crucial to pick the one that best suits your resources, goals, or priorities.
If you want to start investing for profit, a single-family property is an effective way to penetrate the industry and jumpstart your journey in real estate investment. On the other hand, a multifamily real estate investment is recommended if you want to grow your portfolio and increase cash flow. Either of these properties can be an ideal living space for you to enjoy, as well.
Consider house hacking as a strategy
Start small to determine whether real estate investments, such as rentals, are really for you. You can try house hacking or renting out a room, garage, or floor of your property. While sharing space with your tenants can be uncomfortable at first, this strategy could supplement your income, minimize your living costs, and reduce your investment risk.
Additionally, it will help you understand how you can be an effective landlord in the future, manage more extensive properties, and set boundaries with your tenants.
Consider a multifamily rental property
If you want to get into house hacking but are apprehensive about sharing a common area, a multifamily rental property may be suitable for you. With multifamily rentals, you purchase a building or house with several units or living spaces. You can live in one unit while renting out the rest.
This approach lets you share maintenance costs among residents, creates a consistent and reliable source of cash, and is more likely to be financed than single-family properties. If you pick the right property, a multifamily estate can be highly lucrative.
Some types of multifamily rental properties available in the market include townhouses, apartment complexes, and duplexes. Read this guide to buying townhouses if you’re interested!
Perfect for millennials who want to earn with real estate, wholesaling is when you canvas for properties, get them with a contract, then assign the contract to a buyer. As a wholesaler, you will earn with contract fees.
While wholesaling involves technicalities and requires you to know a lot about the market, it does not entail a lot of capital and risk since you don’t need to purchase a property. Moreover, it’s an effective strategy to learn about real estate.
Choose the most suitable financing option
To get started with your journey, building your credit score is vital. A good credit score increases the chances of you getting approved for a real investment loan.
Apart from getting a mortgage, you can also finance your property with government-sponsored loans, real estate investment trusts (REITs), real estate sponsors, and crowdfunding platforms. Another option is building a real estate investment pool to combine your money with other people to purchase a property.
When buying a property, it is crucial to research and ask plenty of questions about the area. This can help you make reasonable predictions about its appreciation value. Surveying the area could also help you assess if you’d want to live in that particular community.
While you’re conducting research, list all the standards, non-negotiables, and characteristics you want from a property. Relate the area to how it suits your lifestyle and long-term goals. Settling for a property without adequate research might only serve you in the short term and, ultimately, hamper the investment you put into it.
Scale and network
Getting into real estate investment can be more manageable through networking, as it can give you insights into the best strategies. Talking to experts can help you learn the grounds to establish a successful journey in real estate.
You could get a mentor, join network groups, and develop lasting relationships with contractors, investors, brokers, and agents. Your network can significantly impact your branding and determine your growth as a real estate investor.
Similarly, if you’re looking to buy a home that you can live in, networking can also connect you to people who may be able to recommend properties that fit your preferences and budget. They can also advise you on the dos and don’ts when buying a property.
To lessen the financial risks in purchasing a property, you can consider getting a partner. With partnerships, you can get help when maintenance or paper problems arise. Similarly, you may work with banks, trusted real estate agents, and credible brokers who can guide you into buying the best properties based on your needs.
Investing in a real estate property is a crucial decision that can greatly affect your finances. While you may need a significant amount of capital, you can get pre-approved for a home loan to kickstart your entry into the real estate market. You can earn profits as an investor while being a homeowner gives you comfortable living space.
Just do the necessary steps before taking the big leap: conduct research, talk to industry experts, and consider different real estate property types that fit your needs. Remember that you can set yourself up for success with proper planning and preparation.