There are many ways that millennials can start investing in real estate. Millennials are the generation of young people who reached adulthood around the year 2000. Before investing in real estate, young people must consider their job situation, financial history, credit score, etc.
However, there are several principles that every real estate investor should follow.
What you can afford
If you can’t afford to take on an investment property right now, don’t do it thinking that the rewards in the future will make up for living on the edge right now. When you apply for a mortgage, your lender will examine your finances and will take into account when deciding whether to give you a loan and for how much.
There is no way to know if market values will drop, if you will lose your job, if your tenants stop paying rent, etc. If any of these scenarios happen, then an investment property may not be a worthwhile risk at this point. Better to wait a few more years when having savings to provide a financial safety net.
Before you buy your first investment property you need to have a good credit score. Hard money lenders generally look at the value of the property and not at the borrower’s finances. However, paying off all of your loans and having a solid credit score will give you an advantage.
Study the market
You need to do your research of the market before investing in real estate. You can start by finding your target price range and seeing what homes in that range sell, and how long they take to sell. Also look at the neighborhoods and pay attention to a few aspects to take into consideration: public transportation, schools, etc.
You must know at this point that you’re not searching for your primary residence; you’re looking for something that will make money and help secure your financial future. If a house looks beautiful and it’s in a nice neighborhood, but an inspection reveals it needs about $10,000 repairs, the numbers may not be in your favor. On the other hand, a property in a growing suburb outside of town that needs some minor improvements may produce a much healthier bottom line.
Work with professionals
Working with a good real estate professional is very important. Be sure to choose an agent who is very familiar with the local market and has experience working with investors.