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If adulting still feels as simple as it seemed when you were a kid, money is likely a big part of the equation — and in a good way.
All millennials aren’t broke. A recent study conducted by Coldwell Banker revealed that 618,000 millennials have another “m” in their stat box — and it’s for millionaire. These high earners have different career paths (from entrepreneurs to tech executives), come from varied ethnic and racial backgrounds and are from different parts of the country.
READ MORE: 5 savvy money moves to make when cash is flowing
In fact, there is really only one thing millennial millionaires have in common: all of these “rich” young adults own real estate. On average, 7-figure earning 20-30 somethings own three properties and have a real estate portfolio valued at $1.4 million.
Sounds nice, but this type of investing isn’t limited to those who are already rich.
You don’t have to be a cash money millionaire to be living really well, or to consider investing in real estate — thousandaires (those earning high five to six figures) are perfectly poised to invest.
Financial institutions such as City National Bank offer an array of services, including investment management, mortgage loans, and lines of credit that create the opportunity for high earners the opportunity to jump into any market.
READ MORE: 5 ways to protect your finances during the coronavirus recession
Don’t overthink the move. If your income significantly exceeds your bills and you’re ready to start building your financial stability — meaning you’ve checked off a lot of the debt boxes that can be a financial noose (think student loans and credit cards), and have established a stock investment portfolio, it’s time to start looking at real estate as a means of diversifying your streams of income.
Despite countless studies and articles that tout real estate as a wealth building must, many people with the credit and cash to invest don’t take the leap.
One reason some well-to-do young African Americans are hesitant to invest is the tales and childhood experiences from the foreclosure crisis of the early 2000s, a period when many Black households, well, just lost out. Back then, the market permitted excessive lending on primary residences and investment properties, where mortgages exceeded income and potential rent rolls.
Middle-class Black folks overextended on loans and without the historical financial stability of other communities (read: parents with money to bail you out) many families lost their homes and wealth. Luckily, a lot has changed in a decade, the most important being our community’s access to information and resources.
Savvy, real estate investment moves have long been a staple in building financial stability, and wealth. Looking to join, or solidify your standing in, the millionaires club? There are many ways to get into the real estate investment game.
Single Family Residence. Location is everything when you’re investing in a single residence because your stream of income is dependent on securing a property that leaves renters clamoring. Nowadays, single residences aren’t relegated to one-tenant and a flat rate. Resources such as AirBnB and Craig’s List allow owners to test the market to determine how to maximize their investment.
Multi-Unit Residence. The great thing about having more than one unit is you’re reducing your risk since you’ll have two or more tenants paying monthly. The flip side is that more money means more duties. For example, you have to set up systems to collect rent and handle grievances fairly.
Commercial Property. That strip mall you order your favorite sushi from, someone owns that—ditto on your favorite bar, movie theater and gas station. That someone can be you. Commercial spaces are great investments because the tenant, which will be a business entity v. an individual, is typically responsible for much of the upkeep in their unit and generally signs on for longer-term leases (five years or more).
REITs. If “landlording” is simply not in the cards for you real estate investment trusts give you the benefit of ownership without any of the responsibility. REITs pool your money with other investors to finance property acquisitions. There is a team in place to handle all of the duties: property management, rent collection, etc. Each month investors are paid dividends based on their shares from rental income.
RESOURCES:
618,00 Millennial Millionaires
https://money.com/rich-millennials-how-many-millionaires/
Foreclosure crisis
https://www.cnn.com/2010/LIVING/10/19/inam.housing.foreclosure.money/index.html
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