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Experts: Gen Z Should Take Barbara Corcoran’s Real Estate Advice and Invest Early

Article first appeared: https://finance.yahoo.com/news/experts-gen-z-barbara-corcoran-150017500.html

Real estate mogul Barbara Corcoran didn’t become a multimillionaire by accident. She approached real estate investing like a science from a young age and did everything she could to succeed.

She’s been quoted as saying people should “beg, borrow and steal” to get into real estate investing as early as possible. Though that’s tongue-in-cheek, Gen Zers who want to become wealthy would do well to heed her advice.

Real Estate Appreciates

Lindsey Harn, a real estate agent with Christie’s International Real Estate, pointed out that what makes real estate a great investment for Gen Z is that “real estate appreciates and rents go up. So the sooner you dip your toes in the real estate market, the sooner you start building wealth.”

With a long time horizon, Gen Zers who invest early could find themselves owning property outright, providing a nice retirement income when they’re older, she added.

First, Have a Stable Job

While “it’s a great idea to beg, borrow and steal when you are young to buy a home,” according to Jeff Lichtenstein, a real estate broker and owner of Echo Fine Properties, he recommended you do so only on two conditions:

  • You are in a very stable job and in a stable industry.

  • You don’t foresee an out-of-state job transfer on the horizon.

“We are living right now in a world where all of us think that prices can only go up,” he said. While currently, with a shortage of homes in many parts of the U.S., that may be true, he said that’s not the case everywhere.

It Will Teach Solid Financial Habits

One of the biggest benefits of investing in real estate early in life is that you’ll form strong financial habits that will help you forever, according to Jimmy Harris, a real estate agent and investor with We Buy Houses In West Georgia.

“Investing in real estate will help you develop financial discipline. Managing real estate requires saving, budgeting and planning, all of which encourage healthy financial habits.”

Don’t Just Buy Anything, However

While it’s great to break in, Harn has a rule of thumb she invests by: “[I] don’t buy a piece of real estate I would not feel comfortable moving into if necessary. I always look for properties with upsides; room to add bedrooms, add an ADU or increase the income potential from the property.”

Live at Home Longer and Save

One good way to save up the money to invest in real estate is to live at home with your parents if they’ll still allow it, and save up for a down payment, Lichtenstein said.

You can also use first-time homebuyer tax and mortgage opportunities, split your first home with a friend and move to where prices are cheaper.

Learn To Identify Good Deals

Gen Zers have the time for learning what a good deal looks like and how to find them, Harris said.

“Network with other investors, via Facebook groups or local meetups, to find out what deals they are buying. If you can bring a solid deal to another investor, I guarantee you will find someone to partner with. You can either wholesale the deal to an investor or partner with an investor.”

Consider a Lease Purchase or Rent-to-Own

A simpler way into owning a property may be to find one that is a lease purchase or rent-to-own, Harris said.

“You can rent a property with an option to purchase it later. A portion of your monthly rent payment will go toward the purchase price. If you decide to purchase the property you would acquire a loan to purchase the property and use your rent credits as a down payment.”

Sometimes landlords with rental properties may be willing to do a lease purchase, too, he said.

“The ideal landlord would own a rental that needs to be rehabbed or has had bad tenants in the past. The landlord may not have the money to rehab the property so they would be more willing to do a lease purchase to keep the property rented without having to make repairs.”

Look For Owner Financing Properties

You might also seek out a property that offers owner financing. This is when the seller acts as the mortgage company and finances the property for you so you do not have to get a mortgage, Harris explained.

“Purchase a property to live in using the cheapest owner-occupied loan you can get. Live in the property for a year or two while saving money for a down payment on your next property. Purchase another property to live in and turn your first property into a rental property. Repeat these steps every few years and watch your rental portfolio grow.”

Try House Hacking

House hacking is one of the best ways to live in a property and invest in a property at the same time, Harris said. You buy a single-family residence and rent out some of the rooms to help cover all or most of your mortgage payment. Or, you buy a multifamily property, live in one unit and rent out the other units.

“You can buy a fixer-upper and live in the property while you rehab it and build equity. Once you have completed the rehab, turn that property into a rental and repeat the process,” Harris said.

Most importantly, Harn added, “Get educated and start now. You won’t regret it.”

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