When it comes to diversifying an investment portfolio, real estate can be a viable addition for recent college graduates, especially with interest rates being historically low.
“It’s an investment that never seems to depreciate,” said Gwen Morgan, managing broker for Century 21 First Realty. “It’s a good, stable investment.”
For recent college graduates with an interest in real estate investment, it is crucial to start off on the right foot.
“Right off the bat, when students graduate from college, they need to get a house, not a car,” said Jay Richter, sales manager of the Naumann Group, a realty agency in Tallahassee.
Richter said recent graduates should seek the least expensive house they can find and fix it up because that will help build wealth over time.
Although purchasing a house should be the first step when it comes to building wealth through real estate, this task is often easier said than done.
“The first house is the most difficult to buy,” said Simone Watts, a real estate broker for Matchpoint Real Estate in Tallahassee.
Once potential real estate investors have acquired their first home, they should keep the property long enough to be able to afford the closing costs and gain equity. “After five years, sell it and get something out of it. It puts money in your pocket and builds wealth because it expands equity,” Richter said.
Watts also said that owning real estate gives tax advantages that you can deduct from your income taxes.
Purchasing land can also prove to be a financially rewarding investment. “Out of all the people who have wealth, most have owned some type of land,” said Richter. “You should buy land and just hold on to it.”
But experts agree that real estate is not a way to get rich overnight.
“The term ‘gaining wealth through real estate’ in general isn’t true. There is a so-called pattern that if you continue to invest that you’ll get rich,” said Florida A&M University alumna Kianni Thomas, realtor and closing coordinator for All in 1 Real Estate Group LLC in Tallahassee. “There’s a lot entailed with investing and buying and selling.”
Dorrece Lisenby, owner of Lisenby Realty in Tallahassee, agreed. “It’s just a different investment tool. It’s not a get rich theme. You have to be experienced,” she said.
Many students agree that real estate can be used as a means to attain wealth if you are dedicated.
“My parents are in real estate so I know it takes a lot of patience. You need to know which states are booming and where there’s a lot of housing development that is needed,” said Talisa Saddlei, 20, a junior nursing student from Palm Beach.
Many students also said the time needed to be successful can deter some them from entering into real estate investments.
“For me personally, it’s a time management issue. It might be a difficult task for a lot of people to handle,” said Deshawn Mosley, 18, a freshman environmental science student from Tallahassee.
Lisenby stressed the importance of having adequate finances when it comes to real estate investment. “It’s not necessarily for someone who’s strapped for every penny and living from paycheck to paycheck,” said Lisenby. “If you have an investment property, you need financial resources, even if it’s vacant and you need funds set aside to make necessary repairs.”
In addition, there are a number of aspects that potential real estate investors should look for in a property before they decide to invest, especially location.
“Location. Location. Location. Meaning close to amenities and close to something that has growth,” Watts advised.
“Flipping houses” is often a popular choice for investors. Richter said flipping a house entails someone who purchases property, fixes it up and then sells it for a higher price.
However, recent events have made it harder to flip property. “There’s been so many abuses they don’t really let you do too much of that in Florida,” Watts said.
Real estate investors looking for property should shop in areas that have a high market value. According to www.yaerd.org, some of the best areas to invest in include Hernando, Houston and Miami.