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Millennials are big news because of their behavior and numbers - over 83 million - but belonging to this group may not help achieve your real estate dreams. Further, following media hype about millennials may lead you astray.
Online and off, millennials are media darlings. Articles and statistics about what they do and don't do abound. But being a millennial is an artificial distinction linked to an accident of birth which does not necessarily carry any special benefits with it. In fact, individual millennials intent on belonging to this "special" group may be led away from otherwise achievable goals, including real estate ownership.
"Millennial" is a popular label (replacing Generation Y and Echo Boomers) that business gurus and authors apply to those born in years ranging from the early 1980s to the first years of the 21st Century - that's the Millennium connection. This label has no absolute definition. The defining range of years is usually chosen to prove the user's point. Popular start years are 1980 or 1982 while wrap years run from 1992 to 2004.
When experts go on about what millennials do and don't do, it's not unusual for individual millennials to react by measuring their success and failure against these apparent standards. Not unusual, but not useful for the five reasons listed below. Here our focus is real estate, so we'll concentrate on how following and not following touted millennial patterns may lead to or away from real estate ownership. Keep these realities in mind before you leap on a trend, scrap a dream, or beat yourself up because you have not achieved what others have:
1. Individuality overrides Commonality
Do the math. If you're between 36 years old and 12, you fall within the millennial swath chosen for this article which examines what the label may cost you. Since legal majority is necessary for real estate ownership, not all millennials are shopping around yet. However, this does mean there is time to learn about the art and science of real estate - everything from legal issues, financial shortcuts, and design concepts to how purchasing and owning work best.
What do those in that 12 to 36 range really have in common? Does the range make you think more about differences and individuals rather than a monolith of sameness? With this in mind, when you hear a fact about millennials, ask yourself what range of behaviors and choices might exist beyond those identified. Develop this into a habit and you'll become a resourceful, creative thinker. Just the right type of person to tackle real estate ownership.
2. Cross Generation Goals
For some families, millennials and their boomer parents may combine goals to jointly purchase real estate that meets both sets of lifestyle needs. Those who unthinkingly follow the stereotype of millennial children moving into the basement, may overlook other solutions to changing housing needs for the two generations involved.
For instance, some families have added a formal self-contained suite to their home which millennial children use while they save for their own home. In other cases, boomer parents use the suite because they are busy traveling and enjoying a second home.
Do some calculating and planning to learn whether the purchase of a two-unit building may combine starter home and downsize home for your two-generation family. Buy a small apartment building, and the additional rental units and the resulting income can help finance the purchase and replace employment income for both generations.
3. Achievable Expectations
The 2008 global recession affected employment and, therefore, many lifestyle achievements for adult millennials. Although they are described as willing to move from job to job, the harsh realities of under employment and student loans are economic burdens for many millennials.
Saving is always a challenge, but when you learn how money can work for you, goals can be reached. For instance, an average wedding costs more than $20,000. Down-scale costs with clever wedding alternatives. For wedding gifts, ask for donations to closing costs and you'll be well on your way to that new condominium or house, which will be a great place to honeymoon.
On the other hand, millennials will represent more than half the workforce by 2020, according to researchers. Those who have expectations of ideal life-work-balanced employment will continue the search rather than settling for less. This level of goal setting translates easily to real estate ownership. Millennials will live active involved lives well beyond their eighties and nineties, so they have time to find the ideal job and build their ideal life around it, real estate included. All this time offers opportunities to learn how to be proficient at saving and borrowing money and at buying real estate and other investments.
4. Shared Goals
In the shared economy, collaboration is welcomed. Collaborative buying could include the buyer and several friends as tenants. The buyer will own the real estate and take the financial risk of buying. The friends agree to pay rent to share the house or condominium (where bylaws allow renting) at a cost that gives them more space and amenities for the money than renting elsewhere.
Shared living also provides opportunity to save on many costs from food and transportation to heating. Taking this a step further, a few friends could create a cooperative that buys or builds housing.
If you don't have friends with vision like this, consider buying into an existing cooperative where costs are lower because "sweat equity," that is, pitching in and working, is part of ownership.
5. Social Media Networking
Millennials grew up with technology and they are not finished with it yet. Although they are described as obsessed with video games, binging on Netflicks, and endlessly texting, millennials are also starting online businesses and creating vibrant communities, online and off. Applying a "many hands make light work" philosophy to sharing skills and knowledge online could lead to many creative financing and ownership approaches and to variations on existing alternatives.
For instance, co-housing, which originated in Denmark, is one of many variations that might appeal to those with strong commitment to community and the environment. Co-housing involves buying a large parcel of land and building a few homes and communal buildings, not just one house. Shared costs and maintenance responsibilities make this affordable. The resulting community lives together and earns together.
Whether you are a millennial or belong to a different generation, don't let your birth-date label turn you into a follower. These five ideas for leveraging the generation label are just the beginning. Technology enables individuals to achieve more than ever before in history. Use that power to zig while others zag and to break patterns that limit results.
Short on creative ideas about real estate and financing? Talk to real estate professionals. Most have many ideas and stories to share with those who have high expectations and are ready to strike out on their own path to success.