Does Age Matter When Investing in Real EstateSep 19, 2022
Age is just a number, they say. And when it comes to investing in real estate, that may be true. But there are some things you should keep in mind depending on your age and where you are in your real estate investing journey. In this blogpost, we'll talk about what you should do if you're in your twenties or starting out in real estate investing.
In your 20s
So if you're in your twenties and you're looking to get into real estate, you gotta get a few habits, or first of all, find a mentor and work for free. We'll talk about that. Find a group of friends that want to grow and succeed so you're surrounding yourself with the right kind of people. And three, get your credit and your money and your spending habits. Because getting good credit, and keeping good credit is gonna make a ton of difference in your thirties, forties, or fifties. And if you're trying to be a real estate mogul, you need to have access to credit. The best way to build it is to get your own credit first. Other things you wanna consider when you're in your twenties are maybe spending some money on some courses, some mentoring, coaching, getting out there, meeting people, going network, and showing people that you're serious.
Another thing that you might wanna do, might not work in every market, but find a place that you can buy as the first house that you can rent out as well. So whether it's bedrooms or Airbnb, we can buy a duplex, and we can rent half of it out. The whole point of this is to get into the mindset of how to create positive cash flow. I think back to one of my first properties, I think it was twenty-three or twenty-four. I had it in my mind that I was gonna buy a property where I could rent out half and live in the other half for free.
That's literally what I did. Now if you hadn't heard my story, I bought my first property when I was twenty-one with a friend of mine, And none of that would have been possible. If I hadn't picked up all the real estate books like Rich dad, Poor dad, Real estate Investing in Canada, The Automatic Millionaire, millionaire, all kinds of different real estate-related books. And I started doing that in my teens. And in my late teens, and early twenties, I'd spend money on courses. I remember I bought a course. It was a real estate course, and it was fifteen hundred dollars, which I mean, Today, it's still a lot of money. But for me, when I was, I think, nineteen or twenty years old, I mean, that was basically college tuition for half a year. and I think I'd spent that on a course.
And, you know, thank God I did that because I went to the courses, I met people, I networked, I got introduced. It's also how I ended up working in private equity. And, you know, I think back to that course, and me investing my time and my energy into that was worth so much more than just the course itself. Now, I'm not saying that's the only way to do it.
In your 30s
Certainly, if you have the opportunity and you have access to people and it costs a little bit of money if you can afford it or you can stretch yourself a little bit. It's better to do that in your twenties because probably don't have the obligations that are gonna come down the line probably in your thirties or forties. It's funny. I think back to some of the courses and some of the decisions I made in my early twenties.
There was a course on how to raise capital and I think it was how to do real state syndications and large transactions, and I absolutely had to go to this thing. So a good friend of mine and I hopped on a plane. It was Phoenix, and we went to this course. And it was at a really expensive hotel that we had no business staying at. So we booked, I think it was a budget hotel, maybe half an hour bus ride away. It would take the bus early in the morning and then walk the rest of the way in our, you know, suits that, you know, God forbid if we got the dress shirt dirty because I think I only had maybe one other one as a spare, but we took the course. We had access to incredible speakers. We learned so much. And I think back even as we had to sleep at the airport that last night because we had to fight the next morning and you know, we had to check out and there's a whole story there. But the point is, I think back as I slept at that airport the night before flying out, the value and the context and everything I had access to were only made possible because I picked up the books, I spent the money on the courses, I did travel. I show people I was serious. And fast forward to today, and I can track back a lot of that opportunity. And I to do those initial steps in my early twenties.
Now the game changes quite a bit if you're in your thirties or forties, you probably have some kids a mortgage, a spouse, a career, and the idea of just hopping on a plane and crashing at an airport isn't you know, the top thing at your list. I get it. I'm in my late thirties. It's the late thirties now technically and the idea of sleeping in those awesome armrests at the airport doesn't exactly appeal to me either.
But if you're in your thirties or forties and you're just starting out in real estate, The key is to align yourself with the right people and the right opportunities. And to do that quickly, you might need to spend some money on education, mentorship, and coaching. You need to figure out how to be in front of the right people and network with the right groups. and what was optional in your twenties and some of the nice haves and the courses and things. Now in your thirties, those become essential because your network will determine your net worth. And if you're new to real estate and you don't know where to go, those forums all across Canada and US have plenty of smart people that can help you in your first or second step in your real estate investing business.
Another thing you need to have control over in your thirties or forties especially as you're building your portfolio is your personal spending. See, I can't tell you how many people I've met that make, you know, eighty thousand, two hundred thousand dollars a year, whatever it is, and they spend every penny they debt. And then they buy that one rental property that kicks off two hundred, three hundred, four hundred dollars a month in positive cash flow. And then they spend that too. See, a mindset shift has to happen for you. So you need to become accustomed to a certain lifestyle. And the earlier you can do that, the better. If you're in your twenties or thirties, you can still accommodate that. If you're already in your forties and you're spending like you're retired in your sixties, you're gonna have to cut back to create that lifestyle that you want. Using cash flow real estate, you need cash flow to be able to actually create additional cash flow. Makes sense. Right? The other thing you might want to consider in your thirties or forties is once you've figured out how to buy a few properties is to monetize what you've learned.
And what I mean by that is, as you're going through understanding how to buy a rental or two rentals or whatever it is, you learn a ton about real estate financing markets. And you should really look at potentially monetizing that. And you can do that by either becoming a mortgage broker or realtor, get in the real estate business somehow, whether it's part-time or full-time, there is this entire bank of information that you've now learned and acquired. So why not get paid to do that? Now if you love what you do day to day and you're just thinking, you know what, Marcin, I good. I'm happy. I love being, you know, a doctor. I love being a plumber. I love doing construction. Whatever it is, I just wanna invest in real estate. That's totally fine. But if you're at your day job and you're making good money or great money and you find yourself thinking about real estate as you're doing your job, It's probably a good time to think about it because in your thirties or forties, that is the best time to make a transition to really be able to capitalize on everything you've learned and be a very credible person in your new role as a mortgage broker or realtor.
In your 50s
From what I can tell when you get to your fifties or sixties, life moves differently again. I've worked with literally hundreds of real estate investors all across North America. And when I really think about it, two-thirds of them, especially in their fifties or sixties, look at real estate in a very different way.
See, they probably already bought a house. They probably paid off a house or two. They've lived a lot of life. They have a lot of experience. And from everything I can tell, if you're in your fifties or sixties, you're probably trying to find ways to reduce the number of hassles you'd have in your life. often times I try to put myself in those people's shoes, and I really think about it. If I was new to real estate, at fifty or sixty years old, what would I want to learn? And it probably wouldn't be how to buy a property and how to sell a property, how to rent out a I think at that point in life, what I'd really wanna do is make sure I know what I'm actually getting myself into, how to do due diligence, how to understand real say how to make sure someone isn't bussing me and just being able to put together a team of people to help me figure out if x opportunity is better than y opportunity and what I should do next.
Also, if you're in your fifties or sixties, there are other considerations such as estate planning, tax planning, wills, and a lot of decisions that no longer just are your decisions, but are family decisions. Now if you're in your fifties or sixties and you wanna take real estate coaching, consulting courses, go to mentorship events, go to networking events, all of that stuff is fantastic and it'll help you become a more proficient investor. Now from personal experience, I've had very few people they're brand new to real estate in their 50s or 60s, call me up and say, hey, Marcin, I wanna learn how to buy an apartment building, show me how it's typically not the case. The idea of changing light bulbs and hiring property management in your 50s or 60s or 70s is not really that high up on most people's priority list. But getting educated, getting informed in your fifties or sixties, even if you're starting out is still tremendously valuable because when you're looking to passively get involved with somebody else to help you buy into real estate, you'll know the kind of questions to ask.
One thing's a constant though. If you're investing in cash flow real estate, it's never too late to start. Whether you're twenty or sixty, If you're buying cash flow-based real estate, that is, in my opinion, the best place to be for the long term.
The information contained herein is for general guidance on matters of interest only. This information contained herein is not intended to provide you with any advice on financial planning, investment, insurance, legal, accounting, tax or similar matters and should not be relied upon for such purposes. M1 Real Capital Inc, Marcin Drozdz is not a financial, legal or tax adviser. You should assess whether you require such advisers and additional information and, where appropriate, seek independent professional advice. You understand this to be an expression of opinions and not professional advice. You are solely responsible for any actions you take with the content and hold M1 Real Capital Inc, Marcin Drozdz or any of his affiliates harmless in any event or claim.