With the right education, strategy and tenacity, millennials stand to gain much from smart real estate investments – you don’t need to be established in a career to get started. There are a million reasons why millennials are well-poised to excel in real estate, and we’ve laid out a few of them here.
1. Immediate Cash Flow
Let’s say you invest in a rental property. The moment you lease it out, you increase your cash flow – the money you make each month after paying off all of your expenses. This cash flow can gradually increase over time without ever forcing you to dip into your initial investment. As rent rates rise with the market’s inflation, you’ll continue to see great returns.
2. Less Volatile than the Stock Market
When just embarking on investing ventures, many millennials immediately look to the stock market but this can be a costly mistake. The stock market is volatile while real estate can provide a measure of protection from market dips and inflation issues. Historically, rental rates and home prices have risen in correlation with inflation, which provides a hedge for both your rental income and future sale of the property. Mortgage payments are fixed; this means you can glean benefits from inflation in the long run. In contrast, stocks and other traditional investments don’t have a direct link to inflationary measure; while prices may rise, the stock market won’t offer the same inflation protection features that real estate can.
3. New Financing Options Are Available
If you feel like you don’t have the funds to handle the initial investment, reconsider your financing options. While banks have tightened up their loan process, making it hard for people of any age to secure financing for home purchases, there are other options. In recent years, there’s been an influx of new, innovative lending practices that could serve millennials well, especially if you’re looking to get into the ever popular house flipping industry.
Hard money lenders often specialize in providing loans to help finance a fix and flip project. But why is hard money lending so enticing? Well, you generally don’t need stellar credit and you can get access to the financing you need within weeks which can be vital in today’s competitive real estate market. If you purchase the right property and follow a strict timeline, you can quickly pay back what you owed. Of course, nothing in life is free. It’s important to keep in mind that these types of loans come with hefty interest rates but if you can stick to a payment plan and settle your debt quickly after renovating the flip, it’s one of the easiest ways to finance a foray into real estate. Another innovative option? Real estate crowdfunding. If you can plead your case to willing investors, you can find yourself easily accessing the finances you need to get started on your real estate ventures.
4. Purchasing Can Be Better than Renting
Millennials and their younger counterparts are far and above moving towards renting instead of purchasing. For those looking for flexibility, this can be a wise choice. However, there’s plenty of opportunity to be had, especially in today’s market, to purchase a home for yourself. Younger people can be reluctant to lock themselves into a mortgage but with the low interest rates and fair housing prices the United States is currently experiencing, it can be a wise choice - especially if you have the easier option of using a grant deed. In terms of flexibility, it’s important to remember that just because you purchase a home doesn’t mean you’re locked into living there forever. You can choose to rent it out years down the road or appreciate it at a later time and sell it for a profit.
Real estate ventures aren’t without their due share of risk but if you put in the time and effort, investing in real estate can be a profit-boosting business that pays dividends over and over again for the rest of your life. From flipping commercial properties to investing in apartment complexes, real estate investing presents a world of opportunity to savvy millennials. Consider your options and determine if real estate could be a lucrative avenue for your career path.
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