How can young, aspiring real estate investors overcome the challenges that have become synonymous with the industry, and stay ahead of the competition?
Millennials aren’t just one of the biggest forces in the home buying market today, they are the next generation of real estate investors. Of particular concern, however, are the perceived challenges that stand in their way. Yes – you heard that right. I said perceived challenges. Of course new investors will run into obstacles, but that is all they are: a temporary inconvenience. There are as many solutions as there are complications. It is how you approach them that will set you apart from the pack, even at a young age.
So what are some of the hurdles facing young real estate investors, and how can they break through them?
1. Lack of Resources: Many young investors blame their inability to get started on a lack of resources. Some even report finding opportunities, but complain they don’t have the money to take advantage of them. Others are too afraid to get started because they think they need more money. If you don’t get started, you won’t have any more than you do now. And there really are ways to invest in real estate with no money down. It’s just a matter of learning the right strategies and tactics. Have you considered a private money lender? Truth be told, a lack of capital should never be an excuse with all that is available out there. You just need to know where to look and be prepared when an opportunity presents itself.
2. Not Being Taken Seriously: While youth is frequently considered a strong asset in business, many young entrepreneurs fear they won’t be taken seriously. Unfortunately, it is a legitimate fear, but not one that can’t be worked around. Know that there are many circles in which others are specifically looking for those that are 30 and under. Opportunities are there for younger investors, but you need to be willing to put in the time to gain experience. Let your hard work be your resume. It also wouldn’t hurt to hire a veteran mentor or to partner up with a more experienced investor.
3. Self-Doubt: Everyone that considers doing something different runs into the fear that they are insane for believing they can do it, or should try it. Often times, such a feelings sneak in right before the leap is made, or after the initial excitement begins to wear off. Recognize that this is a way your brain sabotages you into inaction. Those in the business call it analysis paralysis. Don’t let this happen to you. Anticipate it, and realize the need to work through it in order to see results.
4. Lack of Established Credit: Younger real estate investors often have to face the reality that they don’t have well established credit. Maybe you are fresh out of school, still in school, or have just been strict about paying cash for everything. Credit can play a role in some types of investing and in business. However, you don’t need great credit, or any credit to get started investing in property. Don’t let this excuse rob you of your potential.
5. Expectations: Buying and flipping houses is often made to appear very easy. However, it is easier said than done. New investors will quickly learn that they need to start marketing for deals, learn how to evaluate properties, and write offers. Some expect to be doing a dozen deals a month right out of the gate. Money can come fast and easy in real estate, but it can take some time to build up a pipeline, and for deals to close. The better you understand what’s really involved in getting a deal, and what realistic volume is, the faster success will come.
6. Connections & Relationships: One of the myths about the wealthy one percent is that they were born with money and connections. Some are, but there are even more millionaires and highly successful real estate players that have worked their way up from the bottom. Connections and relationships are one of the easiest things to build. You may need to learn or hone some communication and rapport building skills, but there is nothing stopping you from getting out there and making new contacts today. Build contacts, and you will be surprised at where some of them end up taking your business.
7. Student Loan Debt: Whether you are in college, fresh out, or dropped out for real estate purposes, there is a good chance you’re carrying some student debt. It is important to recognize that it can throw a wrench in your debt-to-income ratio, but there may be no faster way to pay off that debt than real estate investing.
8. Finding Customers: Stop looking for people to sell to, or for deals to fall into your lap. Start looking for as many people to help with their real estate and finance problems as possible, and everything else will fall into place.
9. The What’s Next Trap: If you keep getting stuck on what you need to do next, you’ve skipped the most important step in getting into real estate investing: a business plan. Create a system that works for you; one that is tailored to your goals. Use it as a reference when you get stuck.
10. The Process: If you haven’t been through the real estate transaction process yet, buy a home. Owning your own home creates a great financial foundation, and will kick start your investing. It will also teach you a ton about the process of investing purely for profit.