Your 20s can be a magical time in your life, or they can be a nightmare. You can say the same about real estate investing at any age. To be successful in your 20s at anything, you must be ten steps ahead of the group. To achieve different results, you have to do things differently.
Welcome to the Real Estate Investing at Any Age series, where I discuss how to get your mind and finances right for successful real estate investing. Please check out the companion article titled “Retirement Planning in Your 20s.”
Build the Mindset of an Investor. The most important part of real estate investing (or any investing) in your 20s is reading books. No matter how many YouTube videos you watch on investing, you need to read books.
Do Fitness & Finances Correlate?
Trust me; I bought my first house in 2008 at age 26. I read all the articles on Bankrate.com and other sites—I thought I prepared myself. Not!
I took a huge “L” (loss) on that house, and it took my wife and me ten years to recover financially. I did everything correctly, but my mindset wasn’t ready for a home. I had the perspective of a first-time homebuyer purchasing a home to show progression in life. That’s a bad idea.
I’m 2008, with all the turmoil going on in the stock market, I would have been better off investing my $60,000 down payment into Real Estate Investment Trusts. I would have easily been a millionaire right now.
Your Income Should Increase Every Year
On top of that, the same house I paid $300,000, I could have bought for $200,000 in 2010. I am not saying there is always a better time to buy. I’m saying I didn’t know anything about the stock market, REITs, housing prices, interest rates, the Federal Reserve Funds rate, etc. Build the mindset of an investor first.
You’re in luck. Luckily I have two articles that you need to read immediately. “Become a Real Estate Investor BEFORE buying Your First Home” and “Read These Ten Books BEFORE Buying Your First Home.”
If you take the time to read these articles and these books, I promise you will put yourself in a better position when you buy your first home. You’ll understand that Real Estate is a Mindset (Beginner). In fact, you don’t need any money to become a real estate investor.
No money required. Your success in real estate depends on your mindset, and in your 20s, your attitude needs to be living cheaply. Across the span of your life, housing will be your number one expense.
Thus, if you can keep your housing costs low in your 20s, you can save and invest the difference. This cash flow can turn the tides with your credit score, cash-on-hand, down payment, or renovations.
Single Ladies, What are Your Retirement Plans?
Having $20,000, $50,000, or even $100,000 in liquid cash can change your life. And yes, you can achieve these great numbers. The best way to do this is by house-hacking.
Hacking for the Win. Since you don’t probably own your home, you have to house hack by renting a room for someone else. This could potentially be your parents. Yes, you might want to live with your parents until you save up a down payment to reach a particular amount of savings.
There may be some advantages of you living with your parents as well. Now, people you want to date may call you a “bum” or a “loser,” but you have to get over all of these things. The book “Free Agent Lifestyle” talks about young people getting on your purpose.
Your 20s is all about positioning yourself for the rest of your life. If you can read one book during your 20s, you will be far ahead of where I started.
I reached age 38 before my awakening. However, my wife and I were able to turn it around. We now have a $200,000+ dividend portfolio and own three homes. Since I have read so many books, I can buy a home anytime. Our credit scores are over 800, so we can use leverage and cash to get even more properties at will.
Boring Investing is Good Investing
Don’t be like me. But you don’t have to wait until you are 40 years old to reach your peak. You can peak in your 20s and again in your 30s and 40s. You can keep pushing the boundaries of achievements and scaling higher mountains.
Diversify. Real estate is a great way to achieve great wealth in a compressed timeline, let’s say ten years. But, you need to know how to keep your money growing outside of the real estate game.
You don’t want to have ten properties (all your investments), and the housing market crashes. You have to look at the broader markets and see where you can diversify to protect from uncertainty.
Maybe your portfolio looks more like five rental properties, one laundromat, and $100,000 in REITs. The key is that you need to know, grow, and diversify your portfolio to ensure long-term survival.
Key Takeaways for your 20s. The key takeaways for your 20s are learning, learning, and learning some more. Before you even come up with a real estate scheme, read twenty books. It’s not how many moves you make in real life; it’s how many you can make in your mind first.
How Do You Define Being Rich?
As an investor, I am always playing through investments in my mind. Our primary residence sits on three acres of land. I want to maximize cash flow from the property, but I am always finding ways to improve this investment.
I can drop a mobile home, tiny house, self-storage, start a farm, a parking lot, allow food trucks to come in, or maybe start a dog park. You see, I have read about all of these, and they are all high-quality options.
However, my main concern now is my book business. So, as you read and become a true investor, you will have a deeper understanding of how money works. Real estate and rental properties are a part of a larger investment pool.
You must understand where real estate falls into your overall game plan. If you want to be mobile, maybe REITs are better than rentals. If you’re going to step up shop for a long time in a particular area, what are the population demographics?
The Invisible Budget
Are people moving into your area? What employment opportunities are available in your area, and will businesses stay long-term? Are young families moving in or retirees?
You want to ask these questions because it can determine if you’re going to dive into mobile homes (retirees), apartments & self-storage (young singles), single-family (military), or businesses (commercial).
Conclusion. I would love to tell you to buy 15 doors (units) during your 20s and become a millionaire. That sounds amazing—and it might be your path.
I would instead tell you to read 15 books, save & invest money, and prepare for a great season in your 30s. Living below your means, following a budget, and starting a creative pursuit will pay off huge dividends along with learning about real estate.
Not to worry, in the following article (30s), we will get into the mindset of buying your first property. Until then, read a real estate book. I highly recommend “Unfair Advantage,” which covers gaining an investor’s vision. Good Luck!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
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