Start the Wealth Spiral Upwards Early
Investing can sometimes seem like a practice best left to those that have been in the business world, have spent years garnering research and expertise on business dealings and have traveled the Earth a few times to know what to expect from every twist and turn in the investment industry. Simply put, many people think of real estate investors are older, established people that is not routinely the case.
For a younger person looking to immediately start building wealth either for the long-term goal of a comfortable retirement or a short-term goal of a large purchase such as a first home or other asset, real estate investing can be a great way to build wealth and begin the spiral upwards in net worth early in life. Real estate opportunities are out there and younger people need to realize that they are there for the taking.
The Finance Spiral
The wealth spiral is often a function of the finance spiral, a mechanism that can be used to constantly move upwards through investment properties. When you take on your first real estate property, you are faced with the prospect of increasing its value to sell later at a higher price. It seems simple and in many ways it is. There are a number of great improvements you can do to a home, but those improvements are best left to an article about fixer-uppers.
Instead, we’ll focus on what you do after you’ve improved a property. Everything you do to add value to a home increases the equity you’ve built up in that property. If you take a home worth $100,000, add in $20,000 of improvements and come out with a home worth $150,000, you’ve added $30,000 of equity to that home and, in turn, to your own financial portfolio. That equity can then be used as leverage to get financing for another property and off the spiral goes.#idx-price-bar#
That extra $30,000 of equity can be borrowed against through a bank or other lending agency. Because that $30,000 of equity is more or less an instant credit to your net worth, borrowing against it will give you funds to pursue other opportunities and you can start the process again on that subsequent property. This kind of step-by-step process is common in the investment industry and getting involved at a young age will only give you more time to accumulate wealth as you hop from one transaction to another.
Don’t Let Yourself Be the Barrier
A common feeling when reading something like this at a young age is that there is simply too much complication, too much to be lost if it doesn’t work out, too much stock put in your current full-time job and too much on the line for such a young person. While your earning potential at your current job will certainly play a role in your decision, don’t let a $30,000 per year job now affect your estate decision on whether to devote time and money to real estate investing.
Investors from all walks of life have been able to find success in the real estate industry and if you have the patience and work ethic to exhaust all possible investment opportunities, you will find advantageous situations that you can pursue, no matter your age. The desire to put in the work and the motivation to reach the goal of profit matter much more than the year you may have been born.
As you go through your first full-time job or two and wish that there was something out there you could pursue that didn’t tie you down to a particular location, boss or repetitive task, keep in mind that investing is an option for you no matter what your age. With financing more readily available now than ever before, not considering investing as at least an option is a disservice to yourself. It’s not just for old people.