5 Tips for Millenials Investing in Real Estate
Millennials, the largest living generation in the United States, are poised to enter their prime homebuying years. While the housing market has presented its challenges, particularly with shortages in some markets and increasing prices, many Millennials are still quite eager to buy. The same challenges that can make buying a home challenging could also be a huge benefit for property buyers that are looking to invest.
Even though Millennials as a group are still relatively early in their professional careers, it doesn’t stop them from making a splash in the property market as potential investors. Here are five critical tips for Millennials that are wanting to enter the real estate market.
One type of borrower that mortgage lenders love are those borrowers that demonstrate the ability to save money. It’s the cornerstone of getting a good mortgage and a good rate. It indicates that the borrower is responsible with their finances, lives within their means, and has surplus income above their monthly obligations.
The faster Millennials can build up an investment pool of money, the faster they will be able to add property to their investment portfolio to build equity and a return on investment.
2. Credit Score
Another essential piece of the puzzle is the FICO score. Millennials may either have bad credit or no credit as recent graduates from college. It takes time and credit activity to build good credit. Without a job, Millennials may not have the mechanisms necessary to build that positive credit rating.
There are steps that can be taken to build a great FICO score faster. In addition to paying all bills on time and to the full amount, Millennials should also consider using a personal credit card and then paying off the entire amount each month. Using the card in this fashion does not accrue any interest payments and utilizes credit that will be then be recorded on their credit history.
3. Experience is Earned
There’s no substitute for experience. The most cost-efficient way to learn how to invest is through books and teachers. There are plenty of courses, texts, and experts that can provide assistance and insight into investing in real estate. Conversely, a more expensive way to learn is by making mistakes. The good news is that mistakes are lessons that the investors often never forget.
Yes, the new investor will likely make some mistakes along the way. The important thing is to endeavor to be as educated and prepared as possible, so that these mistakes are minor and not major.
Networking is an essential part of any job and/or investment strategy. Again, there are plenty of experts around that can serve as mentors to new investors looking to spend their money wisely. A millennial looking to get into real estate would be wise to make contacts with lenders, mortgage brokers, and realtors. Talking shop over lunch with front-line professionals is a great way to kickstart that learning curve.
Every investor seeks to know their market better than the next person. That’s how great deals are spotted and how they are fully leveraged. Market research is critical. This might mean going to open houses, talking with new homeowners, talking with prospective buyers, and reading the market research.
What are the median home values in the suburbs and neighborhoods where investment looks attractive? What do interest rates look like over the next two quarters? What supply of homes is available in the target markets? All of these questions and more should be a primary focus of any research.
Pacific Union Financial
Pacific Union Financial, LLC is a full-service mortgage lender providing mortgages, refinancing, and loan servicing across the country and around the corner. With expertise in home loans for credit levels from best to bruised, we’d love to help you enjoy all the benefits of homeownership. Get in touch today and let us show you how we work hard to make mortgage easy.