The previous years have shown us that prices in real estate do not always move upwards. As a result, you should never assume that investing in property will always yield dividends and equity. Instead, you should conduct real estate dealing based on your personal and financial situation.
So should you buy property as a youngster? As with a host of other questions, it depends on a variety of factors. However, for most youngsters, it is probably a no. Here are the reasons why homeownership at a young age might not be a wise decision.
Long Term Investment
Real estate as an investment is usually taken up in order to gather wealth. However, it only yields significant profits after a long period of time, such as a decade or more. Young people are more short-sighted and impulsive. If you are not sure that you are going to hold on to the property for a long period of time, you might be better off investing your money elsewhere. There are a myriad of reasons why youngsters might not be able to hold on to the property for long.
· Still Settling in Career:
Youngsters today are very mobile. They are never sure of whether they will be in the same area for more than a year or two. They might undergo a career change, switch jobs, undergo transfers, go back to university, etc. In such a scenario, they might often be required to sell off property because they have to move away. If this is the case, they might end up losing money, rather than gaining wealth through real estate ownership.
· Affordability:
Often, youngsters do not have enough resources to afford a place they actually like. However, they might buy in anticipation of future gains. While they might be able to trade up to a better property in a few years, they are likely to lose out on equity. The steep costs of transaction will eat up any probable profits. It is better to save towards buying a really good house for a few years, and then buy it when you have the resources.
· Unsure of Life Plans:
After school, most youngsters find a job and work for a few months or a few years. Then they decide that they wish to move around the world and experience a different place. If they have already bought a house, not only would they be hindered by it, but they might even lose money if they sell it.
Thus, youngsters who are not sure of their plans for the next 5 to 10 years are probably better off investing elsewhere. However, if they are sure that they can hold on to the property for long enough, homeownership might be the perfect investment for them.
They need to ensure that they can make all the payments in addition to their usual bills. If they are looking to jump into the landlord business, and if they plan to rent out their private property at some point, buying when young might be a smart move after all.
So should you buy property as a youngster? As with a host of other questions, it depends on a variety of factors. However, for most youngsters, it is probably a no. Here are the reasons why homeownership at a young age might not be a wise decision.
Long Term Investment
Real estate as an investment is usually taken up in order to gather wealth. However, it only yields significant profits after a long period of time, such as a decade or more. Young people are more short-sighted and impulsive. If you are not sure that you are going to hold on to the property for a long period of time, you might be better off investing your money elsewhere. There are a myriad of reasons why youngsters might not be able to hold on to the property for long.
· Still Settling in Career:
Youngsters today are very mobile. They are never sure of whether they will be in the same area for more than a year or two. They might undergo a career change, switch jobs, undergo transfers, go back to university, etc. In such a scenario, they might often be required to sell off property because they have to move away. If this is the case, they might end up losing money, rather than gaining wealth through real estate ownership.
· Affordability:
Often, youngsters do not have enough resources to afford a place they actually like. However, they might buy in anticipation of future gains. While they might be able to trade up to a better property in a few years, they are likely to lose out on equity. The steep costs of transaction will eat up any probable profits. It is better to save towards buying a really good house for a few years, and then buy it when you have the resources.
· Unsure of Life Plans:
After school, most youngsters find a job and work for a few months or a few years. Then they decide that they wish to move around the world and experience a different place. If they have already bought a house, not only would they be hindered by it, but they might even lose money if they sell it.
Thus, youngsters who are not sure of their plans for the next 5 to 10 years are probably better off investing elsewhere. However, if they are sure that they can hold on to the property for long enough, homeownership might be the perfect investment for them.
They need to ensure that they can make all the payments in addition to their usual bills. If they are looking to jump into the landlord business, and if they plan to rent out their private property at some point, buying when young might be a smart move after all.
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