The pandemic put a damper on many investments, especially those involving the stock market, but there’s one area that saw tremendous growth rather than failure – real estate. More specifically, suburban real estate rentals and millennials are all over it, taking advantage of the unique situation to improve their investment portfolio.
Millennials are a generation that fell way behind the eight-ball compared to their ancestors when it comes to investments. They had much less capital and had much less invested in the market than their parents and grandparents had by this age, but they quickly came up from behind. They went from having lackluster (or no) investments to investing heavily in long-distance real estate.
They’re using Roofstock Marketplace, a real estate investment platform that promises to change the way most people invest in real estate, especially first-time investors.
What Is Long Distance Real Estate Investing?
It sounds impossible – how could you invest long distance? With Roofstock, it’s not only possible but easy too.
Roofstock Marketplace lists homes for investors, but not just any homes. They list homes they’ve certified as acceptable for the platform WITH tenants in them. This means investors make cash flow from day one because rent is already being collected and will become theirs when they invest.
What does certified mean?
It means Roofstock professionals do the legwork for you so that you can invest long distance. The legwork they do is in-depth, making the decision to invest an easy one.
Here’s a sampling of what they do:
- A professional inspection of the property
- A professional appraisal of the property to ensure its sales price matches its value.
- An evaluation of the current lease, including rental terms, rent amount, security deposit, and specific responsibilities as outlined
- Evaluation of the rental payment history to ensure the tenants are paying
- Disclosure reports about the area (crime, schools, etc.) and any local hazards
As you can see, Roofstock does the legwork that would otherwise be on your shoulders. If you invest long distance, you still know you are getting a ‘good property.’
With Roofstock Marketplace, you can live in Boise, Idaho, and invest in a property in Saint Louis, MO. You don’t have to live in the same city or the same state – you could live halfway across the country and still invest.
Why Consider Real Estate Investing Over The Stock Market?
Many millennials wonder why they should give up stock market investments in exchange for long-distance real estate.
Real estate can be risky, after all, especially if you’re investing long distances. How do you know you’re making the right choice?
While all investments have risk (otherwise, there would be no reward), investing long-distance with Roofstock Marketplace has its benefits.
- Real estate doesn’t depend on the market. It doesn’t matter if there is political unrest or complete turmoil in an industry. The stock market may react instantly and violently, but real estate generally doesn’t.
- Real estate is in high demand today, especially among renters. After the year we had with 2020, many people don’t want to own a home anymore and would prefer the flexibility of renting. Someone needs to own the homes renters live in, so it might as well be you.
- Real estate appreciates the longer you hold it. Even if the market dips slightly, it usually corrects itself and then appreciates more than before, giving investors a decent return on their investment.
- Real estate investments have regular cash flow, and when you invest with Roofstock, the cash flow starts on day one. You’ll know exactly how much you’ll receive based on the Roofstock evaluation and data provided.
The Challenges Millennials Face As Real Estate Investors
Millennials entered adulthood at an inopportune time. We were facing a recession with the Housing Crisis staring us in the face. The timing left millennials with very few opportunities for jobs within their abilities and desired pay scale and put them ten steps behind their ancestors as far as investments and resources.
Today, millennials still face many challenges when considering real estate investments, including:
- Not enough capital – You need money to invest in real estate, and many millennials don’t have it. But, most people mistakenly believe you need very high down payments to invest. When you work with Roofstock lending partners, you may get by with as little as 20% – 30% down.
- Lack of experience – Most millennials assume no one will take them seriously because of their lack of experience. They let this hold them back, sticking with ‘simpler investments’ like robo-advisor portfolios.
- Lack of knowledge – Most millennials assume they don’t know enough about the real estate market and could never invest in it. They don’t own a home themselves, so how could they invest in other homes? They let their lack of experience translate into a lack of knowledge.
- Lack of networks – Millennials who are still trying to find their way may think their lack of networks stops them from investing. It’s who you know, not what you know in most cases, right? That’s the expectation most millennials have of real estate investments too.
These top concerns keep most millennials from investing and are exactly the issues Roofstock Marketplace fixes.
Between the extensive research, inspections, and evaluations, millennials can confidently invest in long-distance real estate.
Roofstock provides all the necessary resources and even offers educational opportunities through Roofstock Academy to help millennials feel confident in their ability to invest in real estate.
How Roofstock Marketplace Works
The Roofstock Marketplace method is pretty straightforward. Once you create your investor profile (for free) and answer some questions, you’re on your way to investing in real estate.
The platform is free to browse at any time, and you’ll receive property recommendations based on the answers you provided. If you still aren’t sure about your strategy or want a professional opinion, you can talk to Roofstock staff at any time. They’ll even help you craft a real estate investment strategy based on your parameters.
If you want further education, you can enroll in Roofstock Academy, where you’ll get more 1-on-1 support, access to lectures and lessons to help you learn more about investing in real estate.
Once you find a property to invest in, you place your bid. We recommend getting pre-approved for financing either with a Roofstock partner lender or a lender you work with on your own. The pre-approval will help in the bidding process and ensure that you meet the requirements the seller set.
Once you place a bid, the seller can accept, deny, or counter your offer, all in the Roofstock Marketplace. Together you work out a deal, and if accepted, you work on closing the deal by finalizing your financing and choosing your next steps.
If you’ve decided to hire a property manager (which is best for long-distance investing), you can choose your property manager from the vetted professionals Roofstock offers. You’ll see the cost and what they’ll do right on the Roofstock Marketplace, so there’s no guessing about what options you have.
Before you close, you’ll know your net cash flow based on the expenses Roofstock identified, including property management.
Roofstock focuses on the consumer (both buyer and seller) to ensure everyone is informed throughout the entire process.
Why Consider Real Estate Investments
You may wonder why you should choose real estate investments over something less expensive and possibly more secure. Here are the top reasons:
- There’s a predictable cash flow, primarily when you use Roofstock Marketplace. You’ll know how much rent you’ll receive and see an estimate of the total costs, so you know your net cash flow. There isn’t a predictable amount of cash flow you’ll receive with stocks or bonds, and only if you invest in dividend stocks would you receive cash flow.
- Real estate almost always appreciates. Even if there are downtimes and values fall slightly, they usually bounce back and keep going. If you invest for the long-term, you have a good chance of realizing true capital gains.
- You can leverage real estate. This is one of the largest advantages. You can borrow money to invest in something worth much more than you have. Most lenders require a 20% – 30% down payment. For every $100,000 you invest in, you’d need $20,000 – $30,000.
- You build equity in real estate. If you build enough equity, you can leverage that equity and use it to invest in yet another real estate property. You can keep building your portfolio without putting out the cash dollar-for-dollar like you would with stocks.
- You can improve real estate. If you invest money back into the home, you can enhance its value and increase your investment return. Minor renovations and large may have a drastic impact on the home’s value, allowing you to raise the rent and the home’s value, giving you more cash flow and more equity in the home.
- You may get tax deductions. When you invest in real estate, you may write off many of the expenses you pay to maintain the property and even mortgage interest. Investing in real estate is a business, which gives you certain rights to write expenses off and reduce your tax liability.
- You can bypass capital gains taxes with a like-kind exchange. If you use the money earned in an investment property to invest in another similar property, you may avoid capital gains taxes and further your investment.
Passive Income Is Where It’s At
If you’re looking to build a portfolio and set yourself up for retirement, passive income is the way to go. Investing in the market is also passive, but it’s often more stressful and less fruitful than real estate.
When you invest in real estate, such as you find on Roofstock Marketplace, you earn a steady cash flow which you can reinvest in other areas, or even in more homes, growing your possibilities. It all comes down to how you handle your cash flow to put yourself in the best financially stable position.
Millennials Should Take Advantage Of Real Estate Investments Today
While interest rates are still rock bottom and there are plenty of properties available on Roofstock Marketplace, you should take advantage.
Investing in real estate doesn’t require extensive skills or even a lot of money. You don’t have to be accredited – just willing to work alongside a reputable platform that will help you realize the possibilities of real estate investments.
Investing in your own backyard may not be possible, especially if you live in a high-cost area, but investing across the country is simple with a platform like Roofstock. Let the professionals do the legwork for you, handing you the opportunity for a wonderful investment that will flourish for many years to come.
Read more about Roofstock: Roofstock Review
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