Let’s face it: real estate investing is not the simplest thing in the world. The capital requirements, the complexity of the legal and financial matters involved, market volatility, and the associated risks may discourage potential investors. It may be doubly daunting for young, inexperienced individuals looking to park their hard-earned money in a fruitful venture.
Despite these challenges, real estate can be a lucrative and rewarding field of investment for those who are able and willing to put in the resources and the work – even people in their 20s who may be dipping their toes into investing for the first time.
Benefits of investing in real estate early
Building wealth
Real estate, a generally reliable long-term investment, has the potential to give you significant returns, especially if you start early. Investing early will give you more time for your property to appreciate in value and weather adverse market conditions, which can result in substantial wealth accumulation over time.
Cash flow potential
Living on your property is not the only way you can put it to use. You can rent it out and use your rental income for whatever suits your needs. If the property is fully paid for, you can use the rental income on your monthly expenses, savings, or even home renovations, as needed. If you took out a loan to purchase the property, the rental income can help cover your mortgage payments and other fees. Finding a good, reliable tenant means you can benefit from consistent cash flow that can help you achieve your financial goals in your 20s and set you up for success in the years to come. A tangible asset like real estate will also provide you with a stable source of income during times of economic uncertainty.
More flexibility
In your 20s, you will most likely have fewer personal and professional responsibilities and thus more flexibility to pursue projects that interest you. Why not channel that time and energy into researching various kinds of investments, including real estate, which may very well benefit you in the long run? Starting young will also give you more wiggle room to maneuver and take calculated risks for a bigger earning potential.
Better chances of being approved for a loan
Age is one of many important factors in applying for a property loan. For most banks and lenders, borrowers cannot be older than 65 or 70 years old by the end of the loan repayment period. Thus, younger loan applicants have an obvious advantage, because they would have a longer window of time within which to complete their loan payments.
Learning valuable skills at an earlier age
Investing in real estate requires you to develop skills in areas such as finance, property management, and negotiation. By investing early on, you will have more time to learn and develop these valuable skills, which you can apply to your career and personal life. Starting early will also give you time to learn from your investment mistakes and recover from them in a smart and sustainable way.
To find out if you’re ready to consider investing in property, speak to a Maverick Finance Broker who’ll be able to walk you through the process. As always, all of us at Maverick Finance are here to support you on your investment journey.
Maria Papa is a senior property and finance expert specialising in home loans, investment loans, self-employed loans, alt doc loans, car loans, personal loans, and loan protection. She has offices in Sydney, Melbourne, and Manila. If you have questions, you can call Maria at 0430 144 008 or email her at mpapa@maverickfinance.com.au.
Disclaimer: Your full financial situation will need to be reviewed prior to acceptance of any offer or product.