There is an old Chinese adage that says, the best time to plant a tree seedling was two decades ago, and the second-best time is now. The same applies to buying real estate. You can purchase real estate at any age, it’s never too late, but if you can buy a property at a young age, this is much better.
Regardless of what piece of real estate you choose to buy—land, a house, a townhouse, or an apartment, if you invest wisely at a young age, the investment will pay off big time.
The Compound Effect
Real estate revolves around buying a property with the ultimate goal of reaping immense rewards from relatively small ventures. This is called the compound effect. If you invest in your twenties, or earlier, you stand a better chance of benefiting from the compound effect for a longer part of your lifetime, than somebody else who invests in the same later in their life.
Creating wealth by investing in real estate is pretty much straightforward; usually in four simple steps:
- Analyze the market—it’s best to buy when the market prices are lowest!
- Pay the initial payment (the down payment)
- Pay your periodic payments on time (mortgage)
- Transfer of ownership of the property
Your net worth will most likely be tremendously healthy using these simple steps, than if you invested in a lot of other investment opportunities over the same timeline.
10 Reasons to Buy Real Estate at A Young Age
- Helps you with saving
Millennials, and humans in general, are undisciplined savers and quick spenders of money. Having a mortgage leaves you no other option but to save, at least SOME money every month, and work at channeling it towards paying off your mortgage.
- Real estate is simple
When it comes to creating wealth, starting at a young age, most young people want a straightforward niche. Real estate investment is as simple as it can get.
- Real estate appreciates in value
Typically, property prices rise in cycles of seven to ten years. In the US, homes gain value at an average yearly rate of 3% to 5%. If you invest in your twenties, the property’s value could appreciate by a whopping 30% by the time you’re in your 50s!
- Inflation will give you a tailwind
Besides the national annual rate of appreciation, it’s a given that inflation will give you a natural tailwind that further improves the value of your investment. By the time you reach your sunset years, you shall have accumulated so much from inflation alone.
- Rise in rent
The natural reward for owning land is rent, so if you own a piece of property, you can earn rent from it. Having mentioned inflation as one of the reasons to buy real estate, with inflation.
rent quickly goes up, and so does your net worth. Buying real estate at a young age gives you many years to accumulate wealth in the form of rental income.
- You can move into the property
Moving into your property won’t require you to pay rent and you can move into the property at your convenience with fewer hassles than moving into a rental unit. Investing in real estate at a young age gives you relief and independence from paying rent and a host of other bills.
- Huge net worth at a young age
Upon finishing paying your mortgage, you can choose to add the value of your real estate to your net worth. This can be very fulfilling.
Buying real estate is a quick way to create generational wealth. The sooner you start buying properties, the sooner you will learn the property industry’s secrets to success and the longer you will reap the rewards. By taking your time to read this piece, know that you’re already on the right track!