The millennial generation comprises a large portion of real estate investors. Being tech-savvy and goal-oriented, millennials are looking towards real estate as a surefire hedge against economic uncertainty. As a matter of fact, millennials were expected to buy a majority of homes last year. With this in mind, it is safe to say that today’s young adults are in a good position to acquire investment properties.
Then again, mastering the art of real estate investing requires caution since volatility remains high amid the COVID-19 pandemic. For this reason, it’s always important to learn a few important tricks that will help you earn additional income from an investment property:
Keep your eyes peeled
Much like any other market, the performance of the real estate sector depends on different variables, from interest rates to the overall health of the economy. It may seem like you need to put in a lot of work just to understand what is currently going on, but as an investor, you need to make sound decisions based on real-world data.
Much of real estate investing is keeping track of demographic behaviors, local and national housing policies, and external factors that are putting pressure on real estate markets. There is no room for guesswork, so it’s important to know how to spot opportunities, identify threats, and adjust your goals when you have to.
Learn from the best
You can never be a guru overnight when it comes to real estate investing, but you can always talk with veteran investors who will show you the ins and outs of the trade. For this, you can try using platforms like Bigger Pockets where you can get a ton of information from experienced investors.
Apart from online forums, you should also attend webinars or take classes from established investors and syndicators. Then again, learning from the best people in the industry shouldn’t substitute self-education. At the end of the day, knowledge and mastery will only come from firsthand experience. You can learn everything you can about real estate investing, but without any real-world application, it would be difficult to find the best deals.
Set your targets
Before you purchase an investment property (whether it’s an apartment complex or single-family home), it’s important to clarify your targets and set your expectations. Obviously, you will want to build wealth or escape your nine to five job in favor of earning passive income, but you will need to be very specific with your approach. It’s not enough to see the bigger picture, so focus on the details and create a realistic action plan.
For this, you will have to determine the kind of investor you will want to be based on your goals. If you want to focus more on building value and sell at the most opportune time, then you might as well be a buy-and-hold investor. If you are all about cash flow, then you could be an investor who seeks out emerging markets. Just like in boxing, you will have to pick an investing style that matches your mindset and attitude.
Know where to find resources
Investment properties don’t come cheap, so how do you build a real estate investment portfolio that includes apartments and townhouses with the resources you have at hand? Raising capital is a doozy in this industry, but there are approaches and vehicles that millennials can leverage to gather the resources they need.
Hard money lenders often come to mind when you lack a credit history, but there are other financing options that would work well. If you want to break into multifamily investing, you may opt to build a syndication that lets you raise capital using other people’s money or OPM. You can also draft an agreement with a property seller who will agree to sell investment property without the need of a lender. Still, whichever financing option you choose, you will need to do extra research before opting in.
Be prepared for uncertainty
Often, the excitement of having to earn passive income can distract you from certain risks. For this reason, you need to choose the right strategy that minimizes loss or grants access to more investment opportunities. Delaware statutory trusts, for this reason, are ideal if you want to cut expenses and fast-track the acquisition of additional assets. Diversification is crucial to building a solid game plan, so consider such approaches if you want to put your best foot forward.
Investing in real estate doesn’t have to be intimidating to millennials. It’s only a matter of learning how the game works and using your knowledge to succeed.