Four reasons why millennials should invest in real estate now |
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Four reasons why millennials should invest in real estate now

by MyProperty.phPublished: June 27, 2018Updated: July 10, 2018

Once millennials enter the ‘adulting’ phase, it’s time to make life-changing decisions to better their lives. For many, this means exploring the possibility of investing in real estate

Four reasons why millennials should invest in real estate now

At this point, millennials—people born between 1982 and 2004—have already entered 'adulting' territory. This means some of them are already closing the final chapters of their college lives. Others, on the other hand, have already either just entered or have established themselves in the industry they are in.

A labor force survey conducted by the Philippine Statistics Authority (PSA) revealed that 40 percent of the current Filipino workforce is composed of millennials. Projections indicate that in a couple more years, this so-called ‘selfie generation’ will comprise a majority of the talent pool, becoming the driving force of the nation’s labor economy.

If one were to look at millennials, they would probably say that these individuals are daring and willing to try new things. One look at their social media sites will reveal that their spending power is directed towards achieving their #travelgoals, buying the latest gadgets, and mixing and matching fashion pieces for their #OOTDs (‘outfit of the day’, for the uninitiated). Still, some millennials are not as dedicated when it comes to things like investing their money or saving for a rainy day. After all, it can be hard to beat the instant gratification of experiences and material things.

As adults, millennials will sooner or later have to face one of the biggest and most complicated financial decisions of their lives: investing in a home. Committing part of their monthly salary to something of this magnitude will take discipline. It will be particularly challenging, since it won’t necessarily give them the instant sense of fulfilment they are accustomed to. However, they need to realize that the earlier they invest, the easier it will get, and the more they will enjoy the benefits later on.

Four reasons why millennials should invest in real estate now
Millennials enjoy activities that bring instant gratification, such as shopping. Photo via Depositphotos

Real estate is a lucrative form of investment, as intimidating as it may sound. Owning a home is in almost every Filipino's bucket list, though it may take a while to achieve it. The good news is that exploring the property market will reveal a wealth of options that can match your needs and financial capacity.

There are several reasons for you and other millennials to invest in an affordable home now, and these are only some of them.

It could be a steady source of passive income

For millennials looking to diversify and widen their sources of income in the future, investing in real estate is the way to go. Putting a property up for lease could provide you with a steady source of money, which you can use either to settle the mortgage of the home or inject in other investment vehicles like stocks, mutual funds, and variable universal life insurance (VUL).

To succeed in your real estate investment, you have to buy a property in a strategic location and attract an ideal tenant. You can either put the property up for long-term leases or under home-sharing services like Airbnb.

Investing is more practical than renting in the long run

A study conducted in 2014  revealed that around two in three Filipinos (69%) prefer renting to buying a property. This strong bias towards renting has always been apparent in the younger generations.

Four reasons why millennials should invest in real estate now
Putting money into your own home instead of renting is the better financial decision in the long run. Photo via Depositphotos

While it is true that renting allows flexibility, it would still be better to put your money into something that could potentially be your asset in the future. When you rent, the money you are shelling out every month goes straight to your landlord's pockets. The home you are currently living in will never be yours even after many years of payments.

Now, imagine if you dedicated these monthly payments to pay off a mortgage. In as early as ten years' time, you may have already finished paying for your home.

You can take advantage of the Philippines' robust economy

The World Bank expects the Philippines to maintain its strong economic growth in the next three years. As it remains to be Southeast Asia's fastest-growing economy, Millennials would be able to get greater deals for the houses they wish to purchase.

Investing in a home in this thriving economy would unlock the growth potential of your home

Properties purchased this early are expected to increase in value in the next few years, making them a great asset to have in your arsenal. Early investing gives you the most time in the future to harvest the fruits of your labor. If you are planning to raise your own family in the future, it is advised to start investing in a home as early as possible – it would not be wise to play catch up when you already have a lot of responsibilities.

Four reasons why millennials should invest in real estate now
If you have big responsibilities now, it is essential to take steps to ensure your financial security as early as possible. Photo via Depositphotos

Once you have made the decision to invest, be sure to analyze your finances to determine how much you can afford. Don't proceed unprepared; research on things like the area you want to move to, the property you want to buy, and available home loan options. Also, work only with real estate professionals who will always prioritize your needs and wants.

Main photo via Depositphotos

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