Whether it’s buying properties to fix up and sell for a profit or to turn into ongoing rental income, more and more millennials are capitalizing on the hot housing market. Here are a few good reasons to think about joining the real estate game while you’re young:
Time is on your side. Buying real estate that you plan to turn into a rental property can be an especially good option when you’re young. Rental rates generally rise faster than inflation, so your rental income could continue to increase as your fixed-rate mortgage payment stays the same.
You may increase your income. If you can charge more in rent than your monthly mortgage payment costs, you’ll earn a profit each month to add to your savings or put toward your next investment. Just be sure to save money first for taxes and repairs!
You can buy as an owner-occupant. Financing a home that you'll use as rental property may be more expensive than financing a home that you plan to live in. After you live in the home for one year, you’ll be able to rent it out without penalty and with your lower-rate mortgage in place. If the property you buy is multi-family housing, such as a duplex, you may be able to rent the other units right away. If the rent from other units can cover your mortgage, you may be able to live there essentially for free.
It may be easier to do. Convincing your spouse and children to move from place to place gets tougher as the years go by, especially when the new place needs a lot of work! By getting started with real estate when you’re young, it’s only you who has to move.
It’s hands-on. You aren’t just sending your money off to an investment firm—you’re the investor! Real estate investing allows you to have control over what happens to your money and make your own decisions on how to best maximize your profit.
Navy Federal can help you learn more about real estate investment and get on the road to financial success.