Investing in real estate is a great way to build a strong foundation for your financial future! As the millennial generation—those born between 1981 and 1996, give or take—have grown up, more and more millennials are turning to real estate as a long-term investment. In many cases, these young investors are buying properties to rent out, and enjoy the steady passive income.
- A recent Bankrate survey found that 36% of millennials favor real estate as their investment of choice, more than any other generation.
- Many millennials are getting into real estate investing for the first time, while others have already made significant strides.
- If you're one of them, it helps to determine your investment strategy and identify strong real estate markets.
If you're investing in properties in the Dallas/Fort Worth area, it also helps to have an experienced DFW property management company in your corner. This is the fastest way to successfully grow your portfolio!
Why Real Estate?
Interest in real estate investing has spiked across the board in recent years, with millennials leading the charge. There are a lot of reasons behind this trend, and one of the big ones is that millennials stand to gain considerably when investing in real estate as individuals. Some of the top benefits include:
- Return on your investment: Making smart real estate investments can yield big returns, both in the long and short term. Buying properties to renovate and flip can yield a quick return while investing in rental properties can give you steady, reliable passive income over the long haul.
- Tax benefits: Owning real estate comes with a range of potential tax benefits, not the least of which is the ability to write off expenses related to your rental property.
- Control of your own investments: One of the benefits of investing in real estate that seems to appeal particularly to millennials is flexibility and control. You have total autonomy to make key decisions when it comes to each of your properties and your portfolio as a whole. No more punching the clock and no more working for someone else.
Your Real Estate Investment Strategy
In order to go into property investments swinging, you need to develop and refine your investment strategy. This will be the key to determining where you want to invest, what types of properties you want to invest in, and how much you can spend on each property. When you work with reliable DFW property management, they can make developing your approach even easier!
A few things to consider along the way include:
- Types of property: Single-family homes and multi-unit rental properties are the top choices for many millennial real estate investors. These properties offer good pricing options, opportunities for increased profitability, and high demand, especially in strong real estate markets like Dallas and Fort Worth, where increased rental demand has caused a surge in the market.
- Your investment strategy: Since buying a property outright in cash isn't an option for most new investors, planning your financial strategy starts with your credit score (it should be 650 or higher to get the best rate on a loan). It also involves saving enough to put the recommended 20% down payment on your investment property, having enough set aside for a three to six-month emergency fund, and calculating how much you can afford to invest (including renovations) and still turn a profit.
- The 1% rule: Estimating the profitability of a real estate investment often comes down to the principle known as the 1% rule. This rule states that if a property can be rented for at least 1% of the money invested in it, it has the best chance of being profitable. So if you spend $100,000 on a property (including renovations), you need to be able to earn at least $1,000 from it each month.
- Strong real estate markets: Identifying a strong real estate market to invest in is crucial, both on a city-wide basis and on a local neighborhood level. Look for factors like job growth, population growth, rental demand, and city revitalization. These are all factors that have a lot of investors excited about the Dallas area in the coming year.
Finding the Right DFW Property Management Company
Hiring a great property management company is one of the best ways to help you get the most out of your investment properties! Whether you are investing in your first rental property in the DFW area, or are already managing multiple properties, there are a lot of landlord duties that can distract you from your real job—investing in properties and enjoying the profits. A DFW property management company can bring all their resources to the table, including:
- Marketing your property
- Screening tenants
- Collecting rent
- Handling tenant complaints and disputes
- Tackling ongoing maintenance.
At RentHub Property Management, we understand the challenges faced by millennial property investors. We handle the day-to-day management of your investment properties so you can focus on doing what you do best: investing in your future!
If you're curious about how to get started working on your own portfolio, downloading our FREE guide to real estate investing is a great place to launch from! It's full of helpful tips for prospective investors.
Download The Investing Guide