Armed with the right knowledge, strategy, and determination, millennials that invest in smart real estate opportunities stand to profit immensely. There are plenty of reasons the millennial age group is well-poised to succeed in the real estate sector, including the following:
- A Less Volatile Investment
Many millennials look towards the stock market for their first investment, but this isn’t always the best route, especially for a novice investor. The stock market can be extremely volatile, and without the right strategy or guidance, an investment can quickly turn sour. Real estate, in contrast, provides an extra measure of protection from inflation and dips common amongst stock market investments. Historically, home prices and rental rates rise in correlation with inflation, providing a safety net of sorts that maintains your rental income and potential future sale of the home itself. Because mortgage payments are fixed, you can take advantage of inflation over the long run.
- Plenty of Financing Options
You don’t need to be established in a well-paying career to begin investing. Even without a small fortune to spend, you can take advantage of numerous financing options that have cropped up in recent decades. Traditional lenders like banks and other financial institutions have tightened the reins on their loan approval process, making it hard for younger generations to secure traditional financing. However, there are other options to consider. Innovative lending practices have made investments a possibility for millennials that previously wouldn’t qualify for the loans required to invest in real estate. For many, this comes in the form of hard money lending. This is especially prevalent in populous areas where properties are expensive but desirable for their inflation rates. Consider Southern California. Purchasing real estate in one of these areas can be extremely costly, but there’s money to be made in flipping rundown homes on the lower end of the cost spectrum. Investors in these areas often pursue options like San Diego hard money loans; the interest rates for these types of loans are higher, but the money is immediate, allowing investors to jump on those once in a lifetime real estate opportunities when they arise—a necessity in these competitive real estate markets. Looking for another option? Consider taking on a real estate partner.
- An Immediate Income
Should you decide to invest in a rental property, you’ll benefit from immediate income. The moment the property is leased out, you increase your cash flow, which is the profit left over each month after you’ve paid off all of your expenses. Without having to dip into your initial investment costs, you’ll watch your cash flow slowly but surely increase over time. Because rental rates rise with inflation, you’ll get to watch your returns grow through the years.
- Buying Is Wiser than Renting
In recent years, renting has taken precedence over buying, for a variety of reasons. Younger generations are more interested in flexibility, and locking into a mortgage intimidates many. However, purchasing a home can provide plenty of benefits in the current market. Mortgage rates are only expected to increase, and houses in many areas are more affordable than they have been in recent years. When it comes to flexibility, it’s important to consider this: buying a home doesn’t mean locking yourself into living there. Many purchase starter homes with the intention of renting them out a few years down the line.
Real estate investments are rife with risks, but the rewards can be fantastic. If you have the opportunity and acumen, consider the ways a real estate business could boost your bank account and diversify your portfolio. Whether you’re looking to flip a home to sell within the year or you want a long term rental that provides monthly income, there are plenty of opportunities in the real estate industry. Consider your budget, opportunity, and time constraints to determine if real estate is a solid stepping stone for your career aspirations.