Real Estate Expert Nick Statman on “4 key Things Mellenials Need to know About Investing in Property”. If you’re a millennial, you’re probably tired of hearing the generations before you moan and groan about how your generation is entitled, non-committal, and maybe even lazy. The generations before you have a hard time understanding your entrepreneurial spirit, and see your history of hopping from job to job as a sign of inconsistency, instead of an intentional journey of self-exploration. If you are a millennial and you’ve been thinking about property investing, here are a few tips and tricks from seasoned investors that will help you, the entrepreneurial-minded, tech-savvy, ambitious, adventurous, eco-friendly millennial, find success:
Determine A Strategy
Millennials don’t stay in one profession for a lifetime like their parents and grandparents did before them. They are also not in a rush to own property and prefer to spend their money on experiences and adventures. They are known to challenge traditional consumer patterns and stay at home with their parents for longer than the generations before them. All of this could look like a lack of strategy. However, many of the things that millennials are doing that the generations before them didn’t are intentional. Staying at home longer allows millennials to save up money, switching jobs every couple of years will enable them to expand their experience and expertise. There is a method and a strategy to the madness.
Developing a strategy is one of the most important parts of investing in real estate. Millennials who have a plan, who seek out the advice of investors before them, are more likely to be successful than those who go into it blindly. Before you decide to quit your day job and go into property investing full-time, it is essential to define what type of investment strategy you will be putting into place. Are you interested in single or multi-family residences? Do you want all the responsibilities that come with being a landlord, or are you interested in fixing up a home and selling it for profit? The first step in being a successful millennial property investor is defining your strategy.
Find The Funds
Property investing is one of those investments where you need to spend money to make money. Property investing can be an extremely lucrative investment strategy, but it does require capital upfront. Because many millennials are struggling with student loan debt and unemployment, it can be hard to find the funds to get started in property investing.
Understanding your credit score is the first step in figuring out how much money you can borrow to put towards an investment property. According to Experian, a good’ score is anywhere between 881 and 960, and a ‘fair’ or average score falls between 721 and 880.” If your credit score is not within the average or excellent range, you may have some work to do before you can start investing. While you don’t have to be entirely debt-free to invest in property, it is highly recommended to have control of your finances and be working to improve your credit history to qualify for adequate investment financing.
There are many banks and financial institutions that can help first-time home buyers to qualify for investment loans. The Equity Loan Scheme “is available to first-time buyers and existing homeowners who want to buy a ‘new build’ house. The purchase price must be no more than £600,000. Under this scheme, you can borrow 20% of the purchase price interest-free for the first five years as long as you have at least a 5% deposit. If you live in London, you can borrow up to 40% of the purchase price.”
Before you start your search for the perfect investment property, it is important to get pre-qualified. This requires a visit to the bank and a careful examination of your financial status. Getting pre-qualified will help you understand how much of a loan you qualify for so that you can look for properties in that particular price range. There’s nothing more heartbreaking than finding the perfect property, only to find out that you don’t qualify for a loan big enough to purchase it. This pre-qualifying process is a critical step that cannot be missed.
It is also important to remember is that it is doubtful that you will qualify for a significant loan if you don’t have any upfront capital of your own. If you plan to invest in properties, you should be diligent about putting money some of your own money away to help with down payments and initial investment costs.
One of the biggest mistakes that millennials make when investing in property is not thoroughly calculating the costs. There is much more to consider than just the asking price of the property. There are closing costs, maintenance costs, fees, and other unexpected financial surprises that will quickly add to the total amount of your investment. Knowing these things up front can help you enter the investment process with financial confidence.
Nail Down The Negotiation
Millennials are known for being good at a lot of things. Multitasking. Understanding technology. Leadership. Activism. One of the characteristics that millennials need to be well versed in when investing in property is negotiation. Negotiating is a significant part of property investing, and you need to be good at it to be successful in this industry. The best negotiators come to the table prepared, which means they do their homework, they do the research, and they know exactly what they want. They use market research to help them understand each property in detail, which gives them the upper hand as a buyer. The more information you have about the market in the property, the better negotiator you become.
Beware Of Analysis Paralysis
Investing in property for the first time can be a scary but exciting milestone. While millennials get a bad rap for being impulsive, when it comes to property investing, it is important to find the balance between careful research and analysis and taking action. If you wait around for the perfect property in the ideal circumstances, you’ll be waiting to invest forever. Never assume that you are too young or too inexperienced to purchase your first property. Speak with a financial advisor or a mentor to help you determine the best time for you to invest in your first property. The sooner you have a property, the sooner you will start to generate income. As long as you have your financials in order and have done careful research, you can feel confident about making an investment decision that could completely change the trajectory of your life.
You are a millennial. You barely remember a time before the internet. You are creative and open-minded, and motivated. You have been shaped by a unique set of life experiences that the generations before you and after you may never fully understand. You have everything you need to be a successful property investor. When you determine a strategy, find the funds, nail down the negotiation, and find the right balance between waiting and doing, you will have everything you need to enter the property investment industry with confidence.
Be Updated with content from Nick Statman.