Are You Too Young to Invest in Real Estate?
There are real estate success stories for all ages, including young professionals who have successfully invested in real estate while in their early 20s. If you would like to try your hand at it, here are some things to remember:
Learn About the Business
Some people may learn faster through practice than through theory. Know that every mistake you make is money lost. Read about personal finance and investment in general. The web can provide you with a range of educational investment resources. Look for mentors who have done what you want to do. Include lawyers and accountants in your research. They are the best resource people to tell you how feasible your plans are.
Investing when you’re still young can involve multiple speed bumps. The first one is usually the lack of funds. Depending on how well you manage your allowance or perhaps monetary gifts from family, you may not have a lot of savings. If you do have savings, can you afford to pay a $20,000 down payment? If you don’t, there is still a way.
Choose an investment that won’t cost you too much and apply for a government program that helps first-time homebuyers finance their home. If you’re moving out, consider using your funds to buy a multi-family property. You can live in one unit as manager and rent out the remaining units. The FHA will allow you to finance a multifamily unit for only 3.5% of its cost. That’s a huge discount from the usual 10% to 20% down payment.
Crunch the Numbers
This is at the heart of all businesses. Property values in Utah vary depending on location. To know if the property you’re eyeing will work for you, American Loans recommend using a mortgage payment calculator. It should tell you how much you need to earn in rental income to cover the mortgage and other expenses. Have enough cash in reserve for at least three months of the mortgage just in case. This is your personal security, so in case you have vacancies, you’ll still be able to manage your payments.
Age is just a number, as the common saying goes. You’re not too young (nor too old) to invest in real estate. If you do it right, you’ll know how and which property to get.