There’s no doubt that real estate investing is a great way to make money and save for retirement. It’s never too late to begin investing, but in terms of real estate, the sooner you get started, the better. In fact, getting into real estate investing in your 20’s is a smart move.
When you buy a home rather than rent, you ultimately save money and set yourself up for the future with a valuable asset. When you purchase a piece of property and then rent it out, however, you not only have a valuable asset, but you also have a steady stream of income that pays the mortgage and gives you extra money to boot.
The Value of Investing Early
Many real estate investors get an early start knowing the risk can pay off big. Although most 20-year-olds have a lot going on, it’s the perfect time to buy your first investment property. While it can be stressful, all it takes is one small and smart investment to be successful.
For example, one successful investor by the name of Henkel got his start in real estate investing after dropping out of college. At the age of 24, he bought a 5-bedroom house, rented out four of the rooms for $300 each, and lived in the last room himself. He basically lived for free while the incoming rent paid the mortgage. Eventually, he bought two more properties, and today, he is worth more than $4 million.
Securing a Loan in Your 20s
As a young person, it’s likely your credit score will be low thanks to a lack of credit. While this can negatively impact your interest rate, you can rest easy because, in general, interest rates have been low for the last several years anyway.
Another obstacle is the down payment. Most buyers are expected to put down at least 20 percent of the purchase price. Sometimes, a smaller down payment might be acceptable, but it might increase your interest rate.
One thing you will likely have going for you as a young buyer, though, is the fact that you qualify as a first-time homebuyer. Many lenders have programs for first-time homebuyers that lower the required down payment as well as the interest rate if you qualify.
The Bottom Line
Investing in real estate while you’re young gives you many advantages over other people your age. You’ll learn responsibility and patience – both of which will help you in many areas throughout your life. After all, being a real estate investor requires you to make sound financial decisions based on research. Real estate investing is not a get-rich-quick scheme, so being patient is key.
When you buy your first investment property in your 20s, you are setting yourself up to live a financially worry-free life. You’ll be able to afford the things you want as well as be able to put money away for a comfortable retirement. While it’s never too late to get started in real estate investing, the sooner you make your first property purchase, the better.