Real estate investing is, by far, one of the most lucrative long-term investment strategies a person can employ. And as with any investment, the sooner you start, the more you’ll likely benefit.
If you’re a teenager who has heard about real estate investing and decided you want to give it a go someday, you can give yourself a massive head start. Here’s how.
How to Invest in Real Estate in Your Teenage Years
Most people—assuming they get a college degree—start working around the age of 21 or 22. This leaves them with roughly 40 to 45 years to carve out a career and generate income. But if you want to get a head start on your peers, you can always begin earlier.
When it comes to investing, time works to your advantage. The price of real estate steadily increases over time, so starting sooner allows you to buy real estate for less and make more money on your revenue.
But if you’re like most teenagers, you don’t really know where to start and you probably aren’t swimming in money. You’re living in a world where real estate is dominated by adults who are two- or three-times your age with years of experience that you lack. Although it likely won’t be easy, here are some simple steps you can take to get your foot in the door.
1. Read as Much as You Can
The internet is your friend. It’s a vast resource with thousands of articles, videos, case studies, and URLs that will help you learn everything there is to know about real estate. Whether it’s buying property, selling property, managing real estate, financing transactions, or anything in between, there’s something you can learn online.
Take BiggerPockets.com, for example. It’s loaded with forums, podcasts, blogs, guides, webinars, videos, and courses. Dive in and consume as much information as you can. The knowledge to be gained from the site is both free and invaluable. It can lay the groundwork for smart investing in the years to come.
2. Begin Building Credit
Now’s the time to begin making smart financial decisions and establishing sound habits that set you up for future success. For starters, you need to start building credit, which will play an integral role in your ability to secure financing down the road.
“First, you should see if your parents will allow you to become an authorized user on their account,” advises an article on CardGuru. “As an authorized user, you will receive the benefits of good credit if your parents have a good credit score. You will have your own card, and the purchases you make on that card will go toward building your credit score.”
3. Work and Save
Even with clever financing, a lender will require you to have some skin in the game (meaning money on the line). So, it’s important that you have some cash saved in your name sooner rather than later. This means working hard and putting away a large portion of every paycheck you earn.
4. Get Creative With Financing
Real estate investing is a whole lot easier if you have millions of dollars in liquid cash to your name—but don’t be discouraged if that’s not the case. You don’t have to be wealthy to get started. In fact, some of the most successful investors use creative financing to tap into moneymaking opportunities.
According to a story on MoneySchool.org, Lacey Filipich was just a teenager when she purchased her first property—a $103,500 apartment—with a $75,100 loan. She did it by pulling $8,000 from savings, grabbing $7,000 out of an investment account that had been set up in her name (and contained every cash gift she’d ever received since she was a baby), and asking for a $15,000 advance inheritance from her grandparents.
Lacey’s situation is just one illustration. Other teenagers commonly use hard money lenders (typically friends and family) to leverage other people’s money for investments. Be willing to get creative!
Start Now to Get Ahead
Beginning a career in real estate during your teenage years—as opposed to starting in your 30s, 40s, or 50s—will give you a massive head start on the competition. It surely won’t be easy, but you’ll have an advantage over your peers. Begin consuming as much knowledge as you possibly can and never say no to a learning opportunity!
Are you a teen interested in investing? Do you know a teen interested in real estate? Do you or does he/she have a BiggerPockets account?