Over 50% of millennials report having a desire to invest in real estate.
And due to an increase in purchasing power, many are taking advantage of real estate opportunities. For the fourth year in a row, millennials represent the largest group of home buyers in America.
But many young people still buy into the idea that only older investors can make money in real estate.
Let’s take a quick look at how you can get ahead of the game and start investing in real estate while you’re still young.
Live-In House Flipping
As a millennial, you may not have much money to play around with. You may also be looking to buy your first home.
One solution to this problem is what’s called the live-in flip. It involves buying a home for cheap, living in the house while you fix it up, and then selling it after two years.
The best part of this approach is the potential tax benefit. With the section 121 exclusion, you can sell a property you own and pay no taxes on gains up to $250k if you lived in that property for 2 out of the last 5 years. If you file jointly with your spouse, you may qualify for a capital gains exclusion up to $500k.
Buying and Renting a Duplex
If a single-family home doesn’t appeal to you, you can always opt for a duplex. This option allows you to make money investing in real estate by renting out one half of the duplex while living in the other half. In some cases, you might be able to live for free while the other tenant covers your expenses.
Buying and renting a duplex and renting also gives you experience as a landlord. If you choose to live in the duplex, you’ll likely interact with your tenant regularly. Getting this type of experience in your 20’s and 30’s can prove to be beneficial later in life.
Investing in Turnkey Properties
If you don’t have time to renovate a home, and if living in a duplex doesn’t appeal to you, don’t worry. There’s an alternative option.
Turnkey properties are apartment buildings or homes that real estate companies already renovated. In most cases, these companies also include property management services. This means you don’t have to worry about taking care of any repairs.
If you’re a professional who lives in an expensive market such as LA or NYC, this is an ideal approach. It’s a passive strategy that allows you to invest in properties located in more affordable parts of the country.
With this type of investment, the biggest mistake you can make is not doing the proper research. You should always visit the property first. Just because a property has a “turnkey” label doesn’t mean it’s necessarily safe.
Maximizing Your Real Estate Opportunities
Adults often tell young people to invest in stocks and bonds early so they can save for retirement. But the real estate opportunities mentioned above can also put you on the path toward achieving financial security.
When you’re a young investor, it’s important to learn from people with experience. So dedicate plenty of your time to networking. Attend as many events and seminars as you can, and connect with other investors on social media.
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