Starting to invest in property? Property finance is a fantastic way to supplement your income or make a career, but there are many stupid mistakes that millennials make that can torpedo their dream before it gets off the dock. Legions of experts and books are ready to tell you what to do, but what you don’t do can be just as important.
Like all investment, property finance involves risk. By avoiding some common missteps, you can save yourself some headache or even deliver yourself from tragedy.
Pro Tip: Build Passive Income with Rental Income
Wouldn’t it be great if you could become a landlord of single-family rental properties without dealing with all the hassle of buying, improving, and re-selling real estate?
You don’t have to be a millionaire to invest in these types of properties. You can now find your inner property owner with Roofstock.
As with any other rental property, investors earn returns from the rental cash flow and any appreciation in the property value when it’s sold, and all without painting a wall or getting your hands dirty.
There is a reason why the number of investors on its platform increased 126% last year, the sector is booming with investors clamoring to get a return outside of stocks and bonds.
If you’re interested, I recommend you sign up for more information from Roofstock by clicking here.
Using Your Name
Purchasing an investment property in your actual, personal name is a risk you don’t have to take. If an investment goes bad or a lawsuit comes your way, your personal finances are protected. You’ll lose the money you invested but won’t get put out on the street.
Instead, purchase real estate investments through a legal entity like an LLC (Limited Liability Company). There are more legal entities under which you can hold investments, so consult a lawyer (which you can even do online) to find out which fits you best.
Not Doing the Research
There are all kinds of websites and personalities claiming to have hot tips on investment properties out there. Someone thinks they have found the next hot property and go all in only to go bust a little while later. There is no magic answer as to what to invest in and where.
The less glamorous truth is, trends differ from place to place and it takes research to find out what is going to work in your area and what isn’t. Find a niche, study and do the homework. Knowledge is still power.
Going Big Right Out of the Gate
A lot of property finance novices see real investment as a wealth multiplier and a quick way to amass a fortune. The fastest way to get rich? Invest in large properties as soon as you can right? Wrong. Enthusiasm is great, but don’t quit your day job.
Without a safety net of previous successes or the knowledge that comes with them, going too big too fast can leave you broke just as quickly. There’s nothing wrong with starting small, building up some equity to release and then repeating the process. Rome and your investments weren’t built in a day.
You can read as much on real estate investment as possible and do your best to avoid mistakes, but you will still make them. Not learning from your mistakes and letting them defeat you is worse than the mistakes themselves. Property finance can help you achieve financial freedom, but it is still a process that requires determination, perseverance, and sacrifice.
Related: Millennials Guide to Real Estate Investing