“There is one sure way to lose: not to play the game”

If life is a game, there are different ways to win. One of them is to start scoring early. It makes sense when you think about sports, and it lends itself true in life as well. Studying early beats cramming; coming to a job interview early beats running in late; and the same goes for investing in real estate. The earlier you start, the better it is for your long-term financial health.

This is easier said than done, since in our 20s, the freedom of earning our own money can be quite intoxicating. For the first time, we have the cash to buy what we want, when we want - free from the restrictions of having to ask our parents for permission to spend! At this point, it’s easy to decide to spend on things that provide immediate gratification: a new phone, weekend splurges, branded clothing, traveling to exotic and new places. We think to ourselves that our 20s should be for our enjoyment, and heavier responsibilities will come soon enough. We plan on investing later on - perhaps when we’re in our 30s, or when we have life partners to do it with. Anytime but now.

However, investing in property as early as you can is the smartest thing to do, and below are some of the reasons to do so. 

Values of real estate appreciates 

The longer you wait, the more expensive it gets. You can take a look at the last 100 years, and you will see this trend. Just ask how much your grandparents paid for their lot. Ask your parents as well. In fact, just look at the prices for condo units within the last five years.  It will make you wish you bought property while you were still in your mother’s womb!  Buying early locks-in a less expensive price compared to what it would be in the future. If you’re fully confident in your income-generating abilities, locking a cheaper price now means you can pay it off faster later on as your income increases. If selling your property later on in life is something you would consider, it would serve you well to buy now when the prices are lower, to make your later profit bigger.

Different priorities later in life 

When we’re young, things can be simple and uncomplicated.  We have one main responsibility: take care of ourselves. This entails paying our bills, feeding and clothing ourselves, and keeping a roof over our heads. In short, just avoid becoming dependent again on our parents. But as we grow older, we will have new and important things that we might want to spend on: a wedding, followed by kids, then tuition, piano lessons, a car or two for the family’s commute, et cetera. All these add up. 

The longer we can avoid the intersection of investment spending and influx of new expenses, the better. 

Investing early means that by the time we’re ready to start a family, we would have made much headway in paying off our property.  Imagine having just started your property investment at the same time you start a family, with fifteen years left on your loan, versus having only five years left. In the latter scenario, by the time your daughter is ready for school, you’d be done paying for your property and can use the money to enrol her in the best private school in town.

Pay it off while you’re young

Most property loans can last anywhere between fifteen (15) to thirty (30) years. Buying property early, say when you’re 25, means that you may already be done paying it off by the time you’re in your 40s or 50s, well before retirement. That means that anything you earn after paying off the loan turns back into disposable income for you, at a time that you may want to start looking at other investment opportunities, or saving for something else. Imagine the ease of knowing that you have no more remaining loans to pay off when you retire! Continuing to pay for a loan after your retirement, when there’s no steady stream of income, is a stress we all can appreciate not having to endure.

Positive impact on your income 

Whether you are buying property to serve as your primary residence, or as a rental, the impact on your long-term financials is positive. If you’re currently renting, this means that you convert the use of your rent money into payment for your own property. How else can we explain the beauty of this? You’re paying rent to yourself. You’re putting money in your future self’s pocket. Paying rent is akin to bleeding money - it does you no good, and moving-in to a place you own is a service everyone should do for themselves.

And even if you decide to use this as a rental property instead of your residence, it remains a smart move. The income you receive from it can be used to pay off the monthly fees - someone else is paying for you to own property. What’s not to love about that? Just be prepared that you may still have to fork over a portion of the loan payment, if the income you receive for it won’t cover the full amount.