Investing in real estate early can bring you lucrative long-term benefits along with much-needed financial stability.
There is a saying,
Never put off for tomorrow what you can do today.
It still applies in various facets of life, not the least real estate investments! You must have already seen various projections of investments in mutual funds, fixed income investments and other avenues, showing how persons investing from their 20s and 30s build staggering future corpuses as compared to those investing from their 40s and 50s. It mostly works the same in case of real estate.
The earlier you invest, the more you benefit. Period. An early start gives you more returns on your investment. With tax benefits and rental income opportunities alike, real estate investments come with a truckload of benefits for young investors. If you have a stable income without any liabilities in your mid or late 20s or early 30s, then it makes sense to start adding real estate to your portfolio.
Here are 5 reasons why you should begin investing in real estate from a young age-
1. You Have The Luxury of Time
Time is the biggest asset and luxury that you have when you start early. Starting off your career means that you do not have too many family or personal responsibilities to meet. You have the time to do your homework on real estate and the type of property that you wish to invest in. You can take an informed decision and possibly take the risk of property investments early on, when you do not have many liabilities or loans. This is always recommended.
2. You can Get Loans More Easily
Getting loans is easier when you invest in real estate at a younger age. If you are young, you will have a lot more time on hand for repaying your home loan. You will get a longer tenure for the home loan, along with a more competitive rate of interest. Your monthly EMI will also be lower. You can repay in lump sums whenever you get bonuses or any windfalls down the line. With increases in your income, you can increase your monthly payouts and clear off your home loan faster.
3. You can Learn Better Financial Management
Once you begin investing in property from a young age, you will have to be accountable for managing and handling cash flows every month. Whether you are investing in a residential or commercial property and earning rentals from the same, you will have to handle the money that is coming from the investment and set it off against your home loan outflow. This will boost your financial management skills as you will learn to set a monthly budget and stick to the same.
4. You can Break Even Earlier
If you are buying real estate at a young age, then you can definitely expect a quicker break-even period if you are letting out your property for earning monthly income or rentals. Commercial real estate or even residential real estate investments, once squared off against the loan, will break even faster if you start early. Thereafter, it is all about profit maximization and recouping what you originally invested. Here again, the power of time is of paramount importance!
5. Early Retirement
You can achieve financial stability at an early age as compared to your peers, by investing in real estate assets. Real estate is a long-term game, one that offers a second avenue for earning income and may help you opt for early retirement. Those planning to retire early and use their time to set up businesses, travel, or simply pursue their passions, should invest in real estate early on. If you start investing at the age of 25 for instance, you can accumulate sizable earnings until 45-50 years of age. Once you break-even on your property investment, you can expect stable monthly income without any loan liabilities. This will help you retire early.
Things to Keep in Mind
There are a few things that you should not miss while investing in real estate early:
- Do your homework on real estate investments, upcoming locations, expected returns, reputation of the developer, taxation and Government regulations.
- Get advice from real estate experts and platforms for gaining the right perspective on the investment journey ahead.
- You can increase your home loan eligibility by opting for a co-borrower like your spouse. If he or she is a co-owner, then you both will get the benefits of tax deductions on the home loan. You can also share the other costs like stamp duty, registration, legal costs and brokerage.
- Instead of emphasizing solely on capital growth of your investment, focus on earning rental income from the same in order to solidity your portfolio and break even faster.
- Always keep contingencies in mind and have 3-6 months of your home loan EMI in hand along with 2-3 months of the expected rental amount if possible (for situations where tenants delay payments).
- Look for properties in upcoming locations which will witness major infrastructural development in the future. You can buy bigger properties at lower rates initially and reap the rewards later on. However, get professional guidance before investing.
Start investing early in real estate and pave the way towards financial independence, portfolio growth and stable income generation.
