Real Estate Investing for Young Adults

Whether it’s flipping houses to sell for profit or earning rental income as an airbnb, millennials and more and more Gen Zers are capitalizing on the hot housing market as first-time real estate investors. Here are a few good reasons to think about joining the real estate homebuyers game while you’re young.

Time is on your side. Buying real estate as a rental property can be an especially lucrative investment strategy when you're at a young age. Rental rates generally rise faster than inflation, so your rental income could continue to increase as your fixed-rate mortgage payment stays the same, making it an excellent first investment.

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, which you can put toward your next property investment. A disclaimer, though—be sure to save this passive income first for taxes and repairs!

You can buy as an owner-occupant. After you live in your single-family home for a year, you can rent it out without penalty. If the property you buy is a multi-family property, 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’re essentially living for free and building wealth.

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 build equity, increase your cash flow and have control over what happens to your money. You make your own decisions on how to best maximize your profit and control all the related property management decisions.

Answers to FAQs 

How do I get started in real estate investing and the real estate market?

As a young investor, find out how much you can afford. A good way to do this is to meet with a lender such as Navy Federal Credit Union and get preapproved for a mortgage. As a future homeowner, you may also need a down payment to finance your real estate investment.

What is a Federal Housing Administration loan? 

This loan, also known as an FHA, is targeted to first-time homebuyers. It’s a mortgage that is insured by the FHA and issued by an FHA-approved lender. FHA loans require a lower-minimum down payment and lower credit score than many conventional loans, thus making them ideal for low- to moderate-income borrowers. This makes FHA loans popular with first-time homebuyers. They cannot be used to finance a second home, rental home or other investment property.

What’s the best type of loan for an investment property?

You should look at all options, including fixed- and variable-rate mortgages, with your loan officer to see which option is best for your individual situation.

Your partnership with your financial advisor is based on trust. Trust Navy Federal Credit Union to help you learn more about real estate investments to build your net worth and get you on the road to financial success.