The life choices you make in your twenties can influence your chance of conquering the real estate world. Consider these tips to on how to successfully become a home owner.
Being mindful of the decisions you make in your early twenties can help to strengthen your chances of securing a foot on the property ladder.
Here are 10 common mistakes millennials should avoid in real estate:
1. Not starting early enough:
As a young adult, time is your strongest financial asset, which is why you should start the necessary preparation for owning a home as soon as possible.
Putting off the idea is acceptable if you’re chasing a career opportunity in a new city or harbouring a dream of traveling abroad for a few years.
However, if you’re in your early 20’s and staying put for the next five to seven years, then taking the plunge and investing in property is a smart financial move.
Purchasing a home allows you to start building equity, take advantage of tax benefits and make a head start towards retirement.
2. Poor spending habits:
Bad money habits are easy to fall into, especially when you're in your 20’s.
Overspending and under-saving, impulse buying, and accumulating debt can lead to a risky financial situation further down the line.
Be conscious of your spending habits and cut back on purchases that won’t add value to your life goals and ambitions.
3. Accumulating bad credit:
If you’re spending money you don’t have, this probably means you’re trying to sustain a lifestyle that you can’t realistically afford.
Accumulating debt might not seem like a big deal when you’re young and single, but it can sabotage your financial stability if life takes an unexpected turn.
A loss of income and no longer being able to meet credit payments can cast a negative light on your banking profile.
A poor credit record can prevent you from buying a home or securing a property loan.
It is essential to keep your credit card balances low and pay your bills on time to ensure you maintain good credit profile.
4. Lack of life experience:
A common stance amongst most millennials is the “I know it all” attitude to life.
Being confident isn’t a bad thing, but it pays to ask questions.
Family members and friends who have earned their stripes in property investments can offer useful information on how to become a savvy spender and a successful homeowner.
5. Joining the wrong crowd:
Purchasing your first property can be a lot more difficult if you’re surrounded by people who don’t really care too much for real estate.
We all know the saying "you are the friends you keep" - which is why it’s essential to socialise with people who share similar life goals and desires.
This doesn’t mean your social circle has to include property experts and estate agents.
Friends who are equally driven towards owning their own home are likely to share the same curiosity and motivation on how to do so.
Keeping the right company is essential as the wrong crowd can easily distract you from achieving your goals.
6. Forgetting to do your research:
When it comes to real estate, whether as a home or an investment, it all begins with knowing the right things.
It is essential to plan ahead and conduct sufficient research before pursuing your search for a home.
Knowing what constitutes a good deal and what makes a location viable are valuable factors to consider.
This information isn’t difficult to obtain - the internet offers a wide source of information to help teach you the basics of investing at a young age.
7. Having unrealistic expectations:
One of the mistakes made when buying a home is having unrealistic expectations and setting unattainable property ownership goals.
Most millennials that leave their cosy family nest often expect to live in a property similar to what took their parents over forty years of hard work to acquire.
If you’re finding that your desired home requirements aren’t falling within your budget, then it may be time to re-evaluate your list of expectations.
Remember, if this is your first home, it’s unlikely going to be your last, so being realistic is key.
8. Living with your parents for too long:
Living at home longer than expected can come at a cost.
The extra time at home can enable young adults to get a good financial footing before leaving the nest for good.
But the comfy life at home can cause millennials to regress and put their journeys into the “real world” on hold.
Your parents won’t always be around to lean on for help – which is why it’s important to man up, get a job, pay your own bills and meet the real world.
9. Buying on price:
Most young buyers forget that the price of a home is only one part of the equation.
A low-priced property shouldn’t be your only priority when searching for a home.
There are many other aspects to consider, like the location, the type of lifestyle the neighbourhood offers, the level of safety and security, as well as the potential growth of the investment.
A reasonably priced home will always be an attractive choice but it isn’t worth the investment if located in an unideal neighbourhood.
10. Trying to impress others:
It’s hard to escape the influence of people around us, especially from those who live a seemingly wealthy lifestyle.
If your goal is to become a financially independent and successful homeowner, then “keeping up with the Joneses” is not the way to get there.
It’s essential for young buyers to live within their means, budget smartly and avoid excessive spending at all costs.