Some young people seem to be under the impression that real estate investment is something that you do when you’re older. You don’t need to invest when you’re in college. You don’t need to invest when you’re in your 20’s. You’re still young—why do you need to plan for retirement now?
Here's a hint: you absolutely need to be planning for retirement now!
But wait—doesn’t it take money to invest in real estate? Doesn’t it take experience? How can I invest if I don’t even have a college degree? If I’m not even a homeowner myself, how can I buy properties?
Investing while young can seem like a strange concept, but it’s not impossible. Brandon Turner, co-host of the Bigger Pockets podcast and successful real estate investor, flipped his first house at 21. It was also the first house he ever bought.
Real estate investment isn’t a venture reserved for the 40+ crowd. If you’re young, you can start early and find success in real estate. All you need is a solid foundation to set yourself up for success. As a young person, you have the potential to do great things. It’s right at your fingertips! You may feel inadequate, but if you have the drive and ambition to succeed, you can achieve success early on.
4 Essential Pieces of Advice for Young Real Estate Investors
Start an Emergency Fund
When you look to get into real estate investment, your first concern is likely going to be paying for properties: but you’re going to be able to figure that out if you have the drive to do it. Real estate has leverage. You can use other people’s money rather than your own to acquire your investments. Whether that’s a bank loan, a private money lender, or getting your friends and family to help pitch in to get started.
When you’re in the beginning, it’s probably going to be rocky. Real estate can bamboozle you with unexpected expenses! Whether it’s a property issue, a vacancy, or something else entirely, there are likely to be times when you’ll need a safety net.
If you have a fund ready to deal with any contingency, you’ll be well-equipped to handle all that this business may throw at you.
Plan for Your Future
When you’re young, it’s easy to live for the moment and only think in terms of five and ten year plans—if that. Real estate investment is a much bigger picture. You’re planning for retirement! You have to be anticipating your next steps. What is it you want out of this venture? Is retirement what you want? Financial freedom to be a world traveler? Passive income so you can pursue your real passions?
One of the key things a young investor needs is direction. Ask yourself where you’re headed. Channel your passions into clearly defined goals—that’s the path to true success.
Reduce Your Debts
The average college debt is somewhere in the neighborhood of $35,000. As a young person, you probably have some kind of debt weighing on you. It might be from higher education. It might be from getting lured into opening one too many credit card accounts. In any case, you need to get your financial life sorted out if you want to be successful in real estate investment.
Take proactive steps to reducing and eliminating your debts—especially the big ones. Reduce the number of credit cards you carry. Debt will hinder your credit score, hurt your ability to take out mortgages for properties, and prevent you from being able to allocate your resources to their full potential. Don’t let debt put stress on your investing career before it starts.
If you can’t eliminate it all right away, start working out a plan to get rid of it sooner rather than later.
Start Making Connections
In this business, you aren’t alone. There are so many great investors that have gone before you who have decades of experience in the business. As a younger generation, learn from their successes and their mistakes! Look to the legacy they’re leaving. Have conversations. Make connections. Listen.
Remember, too, that old folks love when young people have dreams and ambition. They want to support that! If you get out there and make a strong network of connections, you can find mentors, financial support, advice, key help, and more. Don’t neglect your network. You’ll need it.
If you can start earning passive income now, the earlier the better. Don’t neglect the opportunities that are in front of you right now. You’re never too young!
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