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How to start investing in real estate at a young age written by RoofandFloor, published in The Hindu. August 8, 2017

Young, savvy, and upwardly mobile property buyers are now a force to reckon with in the property market. The previous generation may have believed in building their nest after retirement, but today&rsquos youth wants to start out early. The decision to enter the real estate market at a young age is a bold one. To maximise investment and mitigate risks associated with real estate, young investors need all the help they can get:

 

Educate yourself: Young investors with their eye on property buying should keep abreast with the complex dynamics of the market. Before parking your funds in real estate, subscribe to blogs, online forums, and publications to learn the ABCs of property investing.

 

Basic knowledge of property prices, taxation, and government policies will hold you in good stead at all stages of property investment.

 

Seek advice: It helps to seek advice from others who started investing young to gain a realistic perspective of the financial journey. Experienced investors can share their own experiences and help you avoid pitfalls along the way.  

 

Qualified professionals such as local agents and brokers can also help you understand the market and the best real estate options. 

 

Demonstrate financial discipline: It is never too early to start saving if you have your eyes trained on investing in real estate. A financial planner can help you design a roadmap to accumulate your savings for property investment. Most banks look for proof of regular savings over time.  

 

To build a good case for yourself, it&rsquos important to inculcate good saving habits early by putting aside money earned even from odd jobs.

 

Consider co-borrowing options: You may want to share the cost of your investment with other investors with similar financial goals. With co-borrowing, you can share the loan cost, and additional expenses such as stamp duty, brokerage, legal charges, as well as ongoing costs such as maintenance and repairs. This way, you share any imminent investment risk with several stakeholders. 

 

Diversify your portfolio: Young investors should expand their portfolio to include different asset classes such as commercial, retail, and residential real estate. Commercial real estate assets are known to fetch better returns than residential properties. With a diverse portfolio, risks are spread wide, and the investment is protected from market fluctuations.

 

Focus on income: Financial advisors urge young investors to focus on income or yield rather than capital growth of their real estate assets. You should options that generate regular income as a high-yielding property is sure to achieve healthy capital growth in the long run.

 

Plan for contingencies: Your financial plan must allow for contingencies that are associated with real estate investment. Be prepared for a situation where your tenant may not be able to pay rent on time or construction work on your property gets delayed. It&rsquos imperative to keep aside enough funds to meet your regular expenses and tide over such crises.

 

Long-term investment: Real estate is a long-term investment with its cycle of highs and lows. Youngsters looking to make a quick buck should think twice before investing in property as it does not yield instant returns. Often parents help with down payment or act as loan guarantors on the bank loan, but the rest of the journey has to be traversed alone.

 

Owning a property can provide a steady source of income for a young person and also offer him/her an insurance against any setback. However, exposure to property investment too early in life comes with some inherent risks. Young investors may not be able to relocate in the interest of career if they are tied down to one location due to property investment. There is also the temptation to overshoot budgets, resulting in steep EMIs. Despite these risks, real estate remains a lucrative investment and a high-yielding asset class that continues to attract young investors.

 

(This article is contributed by RoofandFloor, part of KSL Digital Ventures Pvt. Ltd., from The Hindu Group)