Real estate and finances


It seems like everyone in my parents’ generation ended up buying houses. Some of them even ended up in the real estate business and bought apartment buildings and other properties to rent out to tenants. However, I’m not sure if these kinds of opportunities will exist for my generation. It seems like real estate is becoming too expensive, and that I might never be able to do any of this.

Experts, does it still make sense to buy real estate? What can you tell me about real estate and personal (and professional) finance?

Real estate has long been considered a sound investment. There’s just so much room on this Earth, and even less space near big business and cultural centers. As our population grows, it stands to reason that such spaces will become more and more valuable–and, in many cases, they have. Buying real estate, then, can often be a way to build wealth. For homeowners, it’s also a way to trade the drain of rent payments for the more productive expense of mortgage payments (which go toward something–the home–that gives the homeowner equity).

However, it’s not quite that simple, of course. Real estate markets can also go down–our population isn’t spread in equal parts everywhere, neighborhoods can change, and supply and demand can be very regional. Owning properties can be expensive and risky. Even when real estate represents a sound investment, there are areas of the country in which high taxes and high prices can make it more sensible to rent and invest money in faster-growing areas outside of the real estate market instead. The decision to buy real estate is a personal one, and when the time comes for you to make a call, you should look with care at the market in your area, your personal financial situation, and your personal goals and priorities.

There’s no denying that there are some trends that indicate real estate purchases are becoming–to varying degrees and in varying combinations–less profitable, less attainable, and less attractive to younger people. Millennials are buying fewer homes than previous generations did at their age.

However, many factors go into this. Younger people flock to cities, where the conventional wisdom about home ownership sometimes flips. Millennials are settling down later and having families later, which may mean that we’ll see a rise in home ownership later on than we might have expected. Millennials’ financial situations are a factor here, but home ownership is far from dead. It’s possible that you will find yourself in a situation in which real estate purchases make sense.

If that’s the case, you should be careful and smart about how you invest. Homeownership can be rewarding, but you’ll want to be sure that you have the right fit. Location is key, of course, but so is quality: home builders in Melbourne tell us that a well-built home is more apt to represent a sound financial decision because the upkeep and repair costs will be lower than with a shoddy older home.

It is also still possible to make a good living in the real estate business by owning income properties. While the barrier to entry may be high, the nature of a rent-friendly real estate market also means that opportunities to make money by becoming a landlord are everywhere. As with home purchasing, you’ll want to be very careful and do extensive research: a rental property in the right space can be lucrative, but a poor choice can be a money sink! Choose well and invest in the right tools and services to keep your space profitable: be proactive about maintenance and repairs, get landlord insurance, and rely on services that will let you advertise rental property for free, screen tenants, and complete other essential tasks for affordable rates.

Will you even be a homeowner? Will you ever own a rental property? It’s very hard to say for sure–the future depends on you and on a wide range of other factors. However, make no mistake: it is still very possible that big real estate deals loom in your future. The world may be changing, but home ownership and the real estate business are not destined to complete disappear anytime soon.

“Buy land, they’re not making it anymore.” – Mark Twain

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