Investing in real estate has several great benefits. However, most people don’t consider investing until they’re well into their life-long careers. But what happens if you start investing in your 20s? The benefits are pretty significant. So, if you want to learn how to start investing in real estate in your 20s, read along as we go over some benefits and tips.
Contents of This Article:
- Why Is Real Estate a Good Investment?
- Why Should You Start Investing in Your 20s?
- 8 Tips for Investing in Your 20s
- Find Property Management for Your Rental Investment
Why Is Real Estate a Good Investment?
There are several opportunities to make money with real estate, whether it’s with rental properties, flipping homes, or letting your property appreciate. Here are some of the top benefits you can enjoy when investing in your 20s.
- Passive Income
- Tax Benefits
- Portfolio Diversification
Passive Income
One of the top reasons people invest in real estate is to earn passive income. Although it may not be right away, you can generate positive passive income with several different real estate investments. For instance, rental properties can provide positive cash flow through monthly rent payments. However, it’s only really passive if you hire property managers in Baltimore to do the work for you.
If you want a genuinely passive income strategy, you could also try investing in real estate investment trusts (REITs), crowdfunding, or real estate syndication.
Tax Benefits
Another huge benefit of owning real estate is incredible tax benefits. Investors can take advantage of several deductions that save them money at tax time. For instance, you can write off expenses like mortgage interest, depreciation, insurance, and more.
Portfolio Diversification
Finally, another benefit of real estate investing is diversifying your portfolio. While earning passive income with one rental investment may be difficult, it’s more feasible with a diversified portfolio. Additionally, real estate has a low correlation with other assets, like stocks, so you can succeed with real estate while other markets are down.
Why Should You Start Investing in Your 20s?
Real estate investments are a great way to make money and build long-term wealth. However, most people don’t think about real estate investing until they’re in their 40s or 50s. Many people assume that you need a lot of capital to start investing. However, that’s a common misconception.
You can absolutely start investing in your 20s with just a little money. In fact, the sooner you start investing, the more time you have to earn money and build your investment portfolio. Although most 20-year-olds are focused on finishing their degree or finding a job, a good way to start thinking about investing is by saving a little bit each month.
One of the best reasons to start investing in your 20s is because the longer you own a property, the more valuable it becomes. So, if you buy a property in your 20s and hang onto it for several years, it will appreciate over time. Then, you can sell it for significant profits. Additionally, rental rates rise over time, which can also lead to greater cash flow.
8 Tips for Investing in Your 20s
There’s no perfect time to invest in real estate. However, if you want to get a good start on your portfolio, you’ll start as early as possible. That said, here are eight tips if you’re thinking about investing in your 20s.
- Educate Yourself
- Maintain a Good Credit History
- Save Up Money
- Build a Network
- Look For a Partner
- Explore Financing Options
- Consider Different Strategies
- Set Specific Goals
Educate Yourself
The first and most crucial step while investing in real estate is education. It’s difficult to purchase real estate without knowledge of the industry or current market. After all, if you’re putting time and money into an investment, you’ll want to learn everything you need to know before investing.
Maintain a Good Credit History
You need to have good credit to be approved for an affordable mortgage loan rate. Before you think about investing in real estate, look at your credit score and history. Most mortgage loan companies look for a minimum credit score of 620, but to get the best rate, you’ll want a score higher than 700. It can be hard to build credit in your 20s, but it’s possible with multiple lines of credit with low utilization and timely payments.
Save Up Money
Investing in real estate requires a bit of starting capital. It can be more challenging to save up in your 20s since you likely have a lower income and several expenses. However, it’s possible if you start saving a reasonable amount of money from each paycheck you get. First, take care of your necessary expenses, and transfer as much as possible into a savings account. Before you know it, you’ll have enough to make your first down payment.
Build a Network
The best way to succeed in real estate is by building a network of industry professionals. Therefore, you’ll want to start making connections as soon as possible to gain as much exposure and knowledge as you can. One great way to meet people is through real estate investor groups or simply reaching out to investors, agents, property managers, or others within the industry.
Look For a Partner
If you’re new to the real estate industry, finding a partner to start investing with may benefit you. A great starting point is your network of real estate professionals or other investors. Finding a solid partner to invest with can allow you to purchase larger properties, learn more about the industry, and share the risks.
Explore Financing Options
A conventional mortgage loan is the most popular way to buy real estate. Traditional mortgages are generally preferred because they offer relatively low-interest rates and long repayment periods. However, that’s not the only way. For instance, if you don’t qualify for a mortgage loan, you may explore options like hard money loans, private loans, or an FHA loan.
Consider Different Strategies
There are several ways to succeed with real estate investments; you don’t have to stick to one investment type. For instance, you can look into other options if you don’t want to manage an investment property. Popular investment strategies for people in their 20s include investing in publicly traded REITs or crowdfunding.
Set Specific Goals
Before starting your real estate investment, you’ll want to set specific goals for yourself. For instance, think about what types of properties you want to buy, how much you want to make with your investments, and how much time and money you want to put into them. Once you define your goals, it’s easier to take the necessary steps to achieve them.
Find Property Management for Your Rental Investment
Investing in your 20s can set you up for a lifetime of passive income and long-term wealth. However, you have to put in the work to get there. That said, one of the most important aspects of any real estate investment is property management. Without property maintenance, inspections, and customer service, it’s hard to run a rental business.
Need More Advice? contact us today!
If you’re looking for rental management, Bay Property Management Group can help. We offer comprehensive management services for rentals in Baltimore, Philadelphia, Northern Virginia, and Washington, DC. Contact BMG today to learn more about our services and how we can help your business succeed.
