Real Estate Blog PHILIPPINES

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3 Principles Gen Z Should Remember when Investing in a Property

No one is too young to invest in real estate. In fact, your youth can actually be an asset in this arena. For one, time is on your side. When you invest and reinvest earnings on real estate and other financial products, the wealth accumulates over the years. 

As you grow your career and earn more, you have a lot more freedom in terms of exploring different investments, resulting in a more robust portfolio in the long run. Finally, there’s the know-how in the latest technology. You can learn investment strategies, monitor trends, and use the very tools to grow wealth further. 

Based on figures and numbers, it seems like the younger generation already understands the value of real estate investing. In the latest trend report from Lamudi, Gen Zs (ages 18 to 24) had the highest lead growth among age groups in the first quarter of 2021. If you belong to this younger generation of active property seekers, remember these basic principles as you wade through the real estate market:

Find the Best Mortgage Deal

It’s no secret that buying a property requires huge capital. Even the most affordable properties for sale in the metro are priced at a million pesos. But here’s the thing, you don’t have to burn through your savings, sacrificing your wedding budget perhaps, just to buy a house or a condo. You don’t have to pay the full price of the property in one go, and it’s wiser not to, even if you’re capable.

The better approach is to look for a mortgage broker so you can get a home loan with a low interest rate. In this arrangement, you only pay a fraction of the total property price at its purchase (usually at 20 percent), and then pay the lending institution the rest on a monthly basis for a certain period. 

With payments spread over 10, 15, or 30 years, it’s less financially taxing. Even though you’re capable of covering everything in one go, paying only a fraction will give you the buying power for other financial products, such as real estate investment trusts (more on this below). This move makes better use of money, enabling you to grow earnings further.

Be Familiar with Property Investment Types

Residential properties are the most known type of investment among the younger generation. Renting out a condo in college or near the workplace, you’re surely familiar with the passive income your landlord generates from your rental fee. But aside from these popular residential properties, there are other types of real estate assets, namely commercial (offices and retail spaces), industrial (warehouses), and leisure (hotels and beach houses). 

Under residential, there are far more specialized segments, including foreclosuresrent-to-own, co-living communities, and condormitels. It pays to explore these types of properties so you can diversify your portfolio and find more ways to grow your wealth.

Aside from physical properties, there are also REITs (real estate investment trusts), wherein you buy shares of these property companies. These companies, in turn, use the pooled money from investors to acquire assets, thereby increasing the value of shares. By including this in your real estate portfolio, you can unlock high dividends and long-term capital appreciation.

Connect with Others

Other than the finances and knowledge mentioned above, what you need as a young property investor is a network of real estate professionals. Mortgage brokers, local agents, and appraisers can help you understand the market better and decide from there if a particular real estate asset is worth investing in. Plus, you can get advice on investment strategies that can work for your financial goals and situation.

On top of the learning opportunities, you can leverage their networks. In the future, when you’ve grown your earnings and decided to buy an apartment complex or open a real estate flipping business, you can get referrals from these professionals you’ve built relationships with, whether it be for your workforce or clientele.

How do you expand your network when you’re still young? For starters, attend industry events. Now, with the pandemic, it’s much easier since everything’s online. Know the speakers at conferences. Interact with other participants even in the comments section. From there, stay in touch with the people you virtually meet.

Being young offers a great advantage to real estate investing. Don’t hesitate to take the plunge. Start small, and then scale up once you get your footing. In a few years, you’ll surely see the fruits of your labor.

Article and Photo originally posted by Lamudi last July 30, 2021.