At 18 years old, you have a lot of life ahead of you. You’re young and full of energy to make your dreams come true. But where do you start when it comes to investing in real estate? It’s never too early to learn about the process so that can benefit from savings later on down the road

The “how to start investing in real estate with no money” is a blog post that will teach you how to invest in real estate at 18. The article includes tips and tricks on how to get started, as well as advice on what type of properties are good investments.

How To Start Investing In Real Estate At 18

What is the minimum age to begin investing in real estate? Young adults, it turns out, may start as soon as they become 18 and are legally capable of signing agreements.

While real estate investment may be a terrific method to develop long-term wealth, it is not without its risks. Lack of funds, credit history, and experience, particularly for younger individuals, may all be barriers to success. So, how can those who are serious about building a future real estate empire get started?

Young individuals who want to begin investing in real estate at the age of 18 have a lot of possibilities. They may become Investor who is active in the markets by owning actual properties, or they could invest passively in REITs or Real Estate Crowdfunding, or they could become engaged indirectly via Management of Real Estate and Wholesaling.

In summary, younger investors may apply many of the same tactics that older investors use on a daily basis. They will, however, need to be more deliberate in their approach to overcoming important hurdles such as funding and expertise. In this article, we’ll look at a few methods that someone who has recently turned 18 might begin investing in real estate.

Platform Investment Requirement Fees Link
owning rental property $10 Other costs may apply, such as a 1% charge. Find Out More
realtymogul-logo-e1646324100599 $1,000 Other fees may apply in addition to the 2% cost. Find Out More
crowdstreet-logo $25,000 Fees range from 0.5 percent to 2.5 percent. Other charges may be incurred. Find Out More

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Getting Started With Real Estate Investing When You’re Young

“How do you feel about real estate investing?” we asked our Minority Mindset audience, and 72 percent said “I Love It!” It’s not hard to understand why.

Investing in real estate is not the same as investing in the stock market, cryptocurrency, or other assets. In general, the value of most properties rises with time. Although there are differences between a buyers’ and sellers’ market, they are nothing compared to the roller coasters you’ll discover on Wall Street.

Additionally, establishing a real estate empire might be a viable method to diversify your revenue sources. Many innovative young individuals have gone from owning one rental property to owning hundreds, multiplying their revenue sources many times over.

Young people who are just out of high school, on the other hand, will not have nearly the same abilities or resources as someone with more experience. That’s why they’ll want to start slowly by completing the following tasks.

With Fundrise, you may invest as little as $10.

Self-Education

Learning as much as possible about how real estate operates is the first and greatest thing anybody can do. Whatever direction an investor selects, this will be a key stage since it will provide the groundwork for all subsequent choices.

Fortunately, there are plenty of fantastic methods to learn from successful real estate businesses in this digital age:

  • Books should be read.
  • Read the latest blog entries.
  • Watch videos on YouTube.
  • Podcasts should be listened to.
  • Consider taking an online course.

The most essential takeaways from these materials are the building blocks that may be used to create your own strategy. Examine the professionals’ examples to see if you believe you could follow in their footsteps. Also, make a note of any approaches that make you uncomfortable so you may avoid them in the future.

Set your mind to it.

Real estate, unlike other assets such as stocks or cryptocurrency, is a long-term investment. If you make smart selections, limit your risks, and wait for the market to rise, you can make a lot of money. However, it may take many years for this to materialize.

Be honest with yourself about whether or not you’ll have the patience to see this through as someone who is just 18 years old. If you expect to need your money sooner than five years or want higher returns, real estate may not be the greatest option for you.

Recognize Your Options

When you’re young, you may have a very limited understanding of what real estate investment entails. However, you may be surprised to hear that there are a variety of methods to become engaged in this sector.

Here are a handful of the key real estate investment categories: 

  • Having a Rental Property is a great way to make money. or Housebreaking are examples of active investment.
  • Buying and keeping investment funds that handle real estate on your behalf is known as passive investing.
  • Investing without cash — Working with real estate in a non-traditional way, such as Management of Real Estate or Wholesaling.

We’ll go through each of these tactics in further detail in the sections that follow.

How to Invest Actively in Real Estate

Most people anticipate owning a tangible house that they can see and touch when they think of an investment property. This strategy is ideal for persons who want to be hands-on and aren’t afraid to get their hands dirty when it comes to managing renters.

Young people may invest directly in real estate using two strategies: Having a Rental Property is a great way to make money. and Housebreaking.

Begin investing in Fundrise right now.

Having a Rental Property is a great way to make money. 

One of the most tried and proven kinds of real estate investment is rental property ownership. Why? Because, although everyone needs housing, not everyone can afford to purchase a house.

Any building that may be leased to tenants qualifies as a rental property:

  • House for a single family
  • Condo
  • Unit in an apartment

Pros: Once you’ve found some reliable renters, your rental money may be utilized to pay down your mortgage. This means you’ll be basically utilizing other people’s money to pay for and develop equity in your investment home.

Furthermore, it is reasonable to predict that residences in desirable areas would appreciate in value over time. This means that when you’re ready to sell in a few years, you’ll not only recover your equity, but you’ll also benefit from the home’s increased worth.

Cons: For an 18-year-old, coming up with a 20% down payment and obtaining a loan might be difficult. It may be advisable to locate a business partner or hunt for homes that are priced to sell for this technique.

You should also expect to be in charge of managing renters. You’ll be the one to deal with anything that breaks in the middle of the night or if they have a complaint.

Housebreaking 

Since the priority for most 18-year-olds is to move out of their parent’s house and into their own place, one strategy that they might find particularly appealing is something that’s been termed “Housebreaking”. 

Housebreaking is basically where the homeowner shares their property with one or more tenants. The tenants might simply be roommates with free range of the whole house, or they could be designated to only certain spaces (such as a finished basement, converted garage, or the upper level of a duplex).

Pros: Not only do you receive a place to live, but you’re also paying your mortgage with other people’s money. For example, if your monthly housing mortgage is $800 and you have two roommates who each pay $500, you’ll basically be living for free and pocketing an additional $200 each month.

This is also a fantastic long-term plan since it helps you generate equity in the home, comparable to a rental property. You’ll be the one to get the money when you eventually decide to sell it.

Cons: Depending on where you situate the apartment, you can wind yourself seeing a lot of the residents in common areas like the kitchen or living room. You’ll have to give up some privacy in comparison to a rental home where you may only see the renters once every few months.

How To Invest In Real Estate Passively

You’re not alone if the prospect of dealing with renters or being accountable for tangible things feels overwhelming. Many individuals understand that real estate has a lot of financial potential, but many prefer to take a more hands-off approach to it.

Fortunately, REITs and real estate crowdfunding provide opportunities for these individuals to profit.

REITs

A “real estate investment trust” (REIT) is a company that invests in real estate. This is a business that acquires and manages real estate, handles loans, or does a mix of the two.

REITs, unlike single-family rental homes, invest in commercial real estate. A typical REIT portfolio may include the following:

  • Buildings that house offices
  • Shopping malls
  • Apartment complexes
  • Hotels
  • Warehouses
  • Etc.

Businesses will pay rent to the REIT when they move in and occupy these properties. The REIT must then transfer at least 90% of its net profits to its shareholders in the form of dividend payments, as required by law. REIT share prices may also appreciate with time.

The finest aspect of a REIT for an 18-year-old is its simplicity. Shares in publicly listed REITs, like stocks, may be purchased and sold at any time. Anyone over the age of 18 may open an account with a trading app such as M1 Finance or Robinhood and begin trading right away.

Furthermore, risk-averse investors will appreciate the REIT’s consistent dividend payouts.

Cons: The amount of growth that REITs may achieve is restricted. Unlike other investments that have the potential to double in value, the growth of a REIT is often significantly slower.

There’s also no assurance that the REIT won’t lose value, just like equities. If the economy falls into a slump and your stocks lose value, you’ll either have to wait for them to rebound or sell them at a loss.

With Fundrise, you may invest as little as $10.

Real Estate Crowdfunding

Most young people are no strangers to crowdfunding platforms like GoFundMe or Kickstarter. However, there’s a new breed of real estate entrepreneurs who are using that same business model to raise the capital they need for their ventures through what’s called “Real Estate Crowdfunding”.

A real estate crowdfunding platform links individuals who are supporting real estate projects with casual investors like you and me. People with a large sum of money will be able to pick and choose the initiatives they want to support. The ordinary 18-year-old, on the other hand, will almost certainly be restricted to the platform’s private REIT of different projects.

Most real estate crowdfunding platforms such as RealtyMogul and YieldStreet will allow an 18-year-old to join. However, the Investment Requirement can be somewhat steep ranging from $500 to $5,000.

One of the most popular platforms Fundrise has the lowest barrier to entry asking for only a Investment Requirement of only $10 to get started. However, members have to be at least 19 years old to join.

Pros: These private REITs will pay dividends, much as public REITs. In fact, since they’re private, the shares’ dividends and value tend to be more consistent.

Investors would be able to participate in bigger commercial real estate ventures that they would not have been able to engage in on their own, comparable to publicly listed REITs.

Cons: Liquidity will be very limited. Early redemptions will incur a penalty if investors do not commit their cash for a minimum of five years.

Furthermore, since these are private investments, you cannot be certain that you will be able to sell your shares when you are ready. The platform maintains the right to temporarily halt the sale of your assets during moments of economic turmoil.

Real Estate Investing Without Money

Young individuals may find it difficult to come up with the necessary funds or time to become active or passive real estate investors. That doesn’t rule out the possibility of learning the ropes and making money via investment properties. Here are two approaches to consider.

Management of Real Estate

When a rental home owner has too many properties to handle, he or she will often hire a property manager. A property manager may be a person or a company that manages a rental property on a day-to-day basis. This might include things like:

  • Conducting tenant interviews
  • Property upkeep is essential (i.e., mowing the lawn)
  • Rent collection
  • Repairing yourself or hiring someone else to do it 
  • Tenant eviction

Pros: Aside from being paid, you’ll get a personal look at what it’s like to own and manage a rental property. This may be an excellent crash course on not just tenant management but also understanding how property owners operate and generate money.

Cons: You won’t own the property and won’t be able to profit from the rent. The “investment” here will be in earning the expertise and information you’ll need to one day build your own empire.

Begin investing in Fundrise right now.

Wholesaling

When you connect with a property owner and persuade them to agree (by contract) to sell their house for a defined amount, you’re doing wholesaling. You’ll then try to locate a buyer willing to pay a greater price for it. The profit you’ll make as a finder’s fee is the difference in pricing.

Pros: You’ll never truly acquire the property via wholesaling. You’re only selling the right to assign the property’s sale.

Cons: Wholesaling is not for the faint of heart. To see the sale through, it takes a lot of negotiating, networking, and self-motivation.

In 5 Easy Steps, You Can Begin Investing In Real Estate At The Age Of 18.

Following these steps may help young folks get started in the real estate market.

1. Decide on your strategy

Which of the six ways we’ve explored so far seems to be the greatest match for you?

  • Investor who is active in the market
  • Investor who is not active.
  • Participating without spending any money

Reread the advantages and disadvantages of each, decide which one seems to be the best, and then choose the technique that you feel most comfortable with.

2. Locate an Investment

Given the path you plan to take, the next thing is to find the asset you wish to buy. For instance, if you’d like to become a landlord, then find an entry-level property at a good price. Or if you’d prefer to invest in a REIT, start researching options through your brokerage or a Real Estate Crowdfunding platform.

3. Obtain Funding

One issue for individuals who want to buy property outright is coming up with the necessary funds. Because most teens have minimal funds and no established credit, obtaining a traditional loan on their own will be almost difficult. 

Instead, consider the following alternatives:

  • FHA Mortgage — The Federal Housing Administration (FHA) offers a mortgage that is aimed to assist first-time homeowners with poor or no credit.
  • Co-Signers — If you can get a parent or another trustworthy adult to sign the loan with you, their credit score will assist you get it authorized.
  • Bringing in one or more persons with money to join with yours to support your real estate enterprise is known as bringing in a capital partner.

Remember, especially with these final two possibilities, that you’re asking someone else to take a risk on your behalf. Don’t betray their confidence since it may result in strained personal connections.

4. Purchase the asset

It’s time to make your investment after you’ve gotten the funds you need. Close on the loan if it’s a property. If it’s a REIT, you’ll need to put money into your account.

5. Keep an eye on your money

After you’ve had your asset for a few months, you’ll want to check in with it on a regular basis to make sure it’s still operating as you’d want. For example, you may discover that your rental property has greater expenditures than you expected after 6 or 12 months.

Similarly, you should keep an eye on your REITs. If the dividends or share price appreciation aren’t to your liking, you may want to consider switching to another one.

With Fundrise, you may invest as little as $10.

You may begin investing in real estate at the age of eighteen.

When you’re a young adult with little money and no credit history, breaking into the real estate market might be difficult. Fortunately, there are many ways to begin investing in real estate at the age of 18.

Spend some time learning about how other real estate businesses succeed before you get started. You’ll also want to make sure you’re in the mentality that this is going to be a long-term investment rather than a get-rich-quick scheme.

The most direct way to get involved with real estate is to invest in a property directly. You could buy a property to use as a rental home, or you could live there yourself and lease out just a small space to tenants through Housebreaking.

If you’re more of a Investor who is not active., then you could also buy shares of publicly-traded REITs, sit back, and collect the dividend payments. Real Estate Crowdfunding will be another way to provide you with a similar investment opportunity and generate a steady stream of dividend payments.

If money is tight, there’s no reason you can’t learn the ropes of real estate by working as a property manager for someone else. Those with a knack for negotiating deals may learn how to wholesale a home.

As with any investment, you should go along the road that makes you feel the most at ease. Then, look into your financial alternatives and locate the precise investment that you want to make. 

If you wish to invest in real estate at the age of 18, you could receive some funny stares. But everyone has to start somewhere, and most investors wish they had started their trip far sooner. Just remember that getting engaged today will only boost your prospects of success and developing long-term wealth in the future.

Continue reading:

  • Alternatives to Fundrise for Real Estate Investing
  • Is RealtyMogul a reputable company?
  • Which Is Better For You: Fundrise or Rental Property?

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The post How To Begin Investing In Real Estate At The Age Of 18 first published on Minority Mindset.

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