Why invest in real estate at a young age
As India celebrates her 76th year of independence, there is another kind of independence that the youngsters of today look forward to – gaining financial independence. Investors in their 20s have more time to grow their wealth and are exploring a number of interesting investment options.
For the past 50 years at least, real estate has always been a growth-oriented investment vehicle. When you take the time to seriously learn about it and invest in real estate at a young age, you reap its benefits quite early on.
Young real estate investors must take care to weigh their options and choose properties that best match their risk tolerance and time commitment. With the real estate scene evolving dynamically, as a result of higher disposable incomes, easier accessibility to loans and the advent of PropTech or real estate technology, getting into real estate investment is so much easier now than before.
Young investors surrounded by the latest technology will definitely have an edge when it comes to taking well-informed decisions regarding real estate investments. And we agree with Andrew Carnegie when he says that “The wise young man or wage earner of today invests his money in real estate!” Here are some of our top reasons why real estate investment at a young age is always a wise idea:
- Building Significant Equity – When you invest in property early, you get the opportunity to build up significant equity over time through loan payments and property appreciation. This can lead to high-value portfolios say after 10 or 20 years.
- More Time to Take Calculated Steps – When you lay the groundwork for investing at a young age you have the time, energy, freedom and flexibility to take calculated steps when it comes to investing in real estate.
- Faster Loan Approvals – It is easier to get home loans sanctioned from financial institutions when you are young. Banks calculate the time the applicant has to pay off their debt, so youngsters have an added advantage over older people. You could also have the option to choose EMIs with low-interest rates.
- Better Financial Management - Real estate investment at a young age is a great way to bring about financial discipline. The cash flow that you could get from investing in a residential property if in the form of rental income should be managed smartly.
- Tax Advantages - Young real estate investors can assert tax benefits if applying for a home loan. Tax breaks on home loan repayment are available under section 80C of the Internal Revenue Code. Under this section, you can deduct up to Rs 1.5 lakh in tax per year for the principal repayment of a home loan.
How to get into real estate investing:
While educating yourself with the basic knowledge of property process, taxation and government policies is a good start, there are some easy steps that you can take to start real estate investment at a young age.
- Get Advice – Talk to experienced investors or qualified real estate professionals to get a clear idea about the investment journey and also to help you understand the market and select the best real estate options.
- Practice Financial Discipline – To invest in real estate at a young age, you can start saving habits early even if it is from part-time jobs or freelance gigs. A financial planner can help with a roadmap design to accumulate your savings for property investment.
- Consider Portfolio Diversification – Young real estate investors should consider investing in different asset classes like commercial, retail and residential real estate to expand their portfolios. In this manner, you can be assured of better returns and protection from market fluctuations.
- Expand Knowledge – Reading books can provide information on the basics of investing, industry terminology, key strategies and more. The E-Myth Real Estate Investor by Michael Gerber, The Real Estate Wholesaling Bible by Than Merrill or The Book on Investing in Real Estate with No Money Down by Brandon Turner are insightful reads to start with.
Those making a real estate investment at a young age are often advised to focus on income or yield rather than the capital growth of their real estate assets. A high-yielding property is sure to achieve healthy capital growth for you in the long run.
And again, real estate is a long-term investment. It is not something you should get into if you are looking at getting instant returns or fast cash. If you have made up your mind to start investing in real estate, then check out the tech enabled SMARTMENTS at Brigade Orchards, one of Bengaluru’s top 3 smart townships.