If you’re a young professional considering investing for your future, you may be wondering when to start. The answer is highly individual, but it is a safe generalization to say that sooner is better than later. Investing in real estate young has strong advantages. By creating a portfolio of stable, long-term investments early, even a modest one to begin with, you establish a financial foundation for yourself that can play a decisive role in a prosperous future. You also establish sound financial habits—thrift, long-term planning, and reinvestment—that will serve you into retirement and beyond.
Start Investing in Real Estate Young
It is obvious that investing when young offers more time and opportunities to make a profit, but the point nonetheless deserves comment: Investing is not an activity for “someday.” It also demands a few prerequisites—a certain amount of knowledge or successful advisers, some startup cash, and a business plan, for example. It is a big leap that requires determination.
There are benefits specifically for millennials in multifamily real estate investing. One is the trust and reputation you will build along with your portfolio. This will pay off (along with your collateral) in easier access to financing for future investment activities, and it will help you build the network of colleagues and partners that you will need to succeed. While this is a benefit to investors of any age, it is a particular advantage for young investors, who are more likely to lead peripatetic lifestyles. This is the age of “gig workers” not “company men,” and the change has made it harder to build a credit score. Real estate investing can help counter this trend.
Another advantage of investing in real estate young is that it provides a steady income along with the expected appreciation of assets. This could help millennials pay off student loans or make payments on items bought on credit. If that cash flow is not used immediately, it can be reinvested to provide a financially secure future and perhaps even an early retirement.
Multifamily Is a Good Place to Start
Multifamily real estate, especially luxury multifamily real estate, is typically a stable long-term investment that will provide a reliable cash flow. Luxury multifamily, although it often starts out with a lower capitalization rate than Class B or C properties, typically shows the most appreciation and longest service life.
Another important benefit of real estate investing is the ability to defer capital gains taxes and depreciation recapture through the use of the 1031 exchange. As long as you replace your holdings with properties of equal or greater value, you can exchange, rather than sell, your investment properties and defer those taxes. While there are numerous strict rules that regulate the process, the 1031 exchange has been used for generations in a multitude of complex transactions.
One of the smartest moves a beginning investor can make is to receive superior guidance. A great way to do that is to invest through a private investment real estate firm. When you invest in partnership with a large organization, your investment options are broader than if you invest on your own.
At CWS Capital Partners, we are a fully integrated multifamily real estate investment management firm that offers everything from due diligence and multifamily real estate valuation to transaction support and property management. We specialize in assisting our clients with 1031 exchanges, acquisitions, repositioning, and development. We also own and manage luxury multifamily investment communities in major markets around the country and employ a team of experts who can help you hone your investment strategy.
For more articles like this one, check out our investment strategy blog posts.
Please contact us to learn more about investing with CWS Capital Partners, or view our current offering by completing our self-certification form for accredited or qualified investors.
The information provided here is for your general informational purposes only. It should not be considered a recommendation or personalized advisory advice. CWS has made this third party information available from authors it believes are knowledgeable and reliable resources. However, its accuracy or completeness cannot be guaranteed and sentiment may change due to legal or economic conditions.
All investments involve risk including the possible loss of principal. You should familiarize yourself with all risks associated with any investment product before investing.
Advisory services are provided by CWS Capital Partners LLC, a registered investment advisor.
Securities offered by CWS Capital Partners LLC are through an affiliated entity, CWS Investments. CWS Investments is a registered Broker Dealer, member FINRA, SIPC.