With the current trend of the real estate market going up, there are actually lots of opportunities for people to earn profits from various types of real estate investments. Because of this trend, there are those who are looking for the long term. People plan ahead of their retirement, and they find real estate investing to be the perfect investment in terms of timeframe and returns.
G. Brian Davis wrote an interesting article in Lending Home about real estate investing for retirement income. Read more below to find out.
Investing in Real Estate for Retirement Income
Ever thought about buying an investment property for retirement income? Investing in real estate for retirement boasts plenty of advantages over traditional retirement planning.
Ever thought about buying an investment property for retirement income?
Investing in real estate for retirement boasts plenty of advantages over traditional retirement planning. In the traditional model for retirement income, workers save and invest money over a 40-some year career, then gradually draw down their nest egg over the next 15-30 years. The premise centers around “safe withdrawal rates” and the strategy of how much of your nest egg you can sell off each year without running out of money.
Real estate investing, on the other hand, offers a lot of alternatives to traditional stocks and bonds if done right.
For example, investors can buy rental properties for ongoing passive income, invest in REIT shares, or hold private notes. Property investors can even flip homes after leaving their day job, as a post-retirement part-time business for fun and extra money.
In this article, you will learn 6 ways investing in real estate for retirement can improve a retirees’ income, the 6 different real estate investment options that can be used for retirement, and strategies to mitigate the risks to maximize potential returns.
Advantages of investing in real estate for retirement income
Beyond the ongoing income of rental properties and the high dividend yields of REITs, here are 6 other benefits of investing in real estate for retirement income to complement your existing strategies.
The golden rule of investing is a simple one: the more diversification, the safer the portfolio.
If most of your nest egg is invested in stocks, what happens if the stock market crashes when you retire? This is known as sequence risk, which is a serious concern for new retirees. The more of your nest egg is invested in only equities, the greater the risk.
Real estate provides an alternate source of income so that retirees can lean less on their stock portfolio during bear markets and minimize their withdrawal rate.
Another advantage to investing in real estate for retirement is that you can leverage other people’s money to buy the properties, so that you can risk less of your own nest egg up front. In the case of fix-and-flip and rental properties, you can borrow up to 90% of the purchase price and 100% of the renovation costs, if needed, to build your own portfolio of assets.
This is a great advantage over investing in stocks, in which you are typically allowed to buy up to 50% value on margin (borrowing money from a broker to purchase the stocks).
Rental properties held long-term tend to appreciate over time, even as tenants pay off your mortgage balance. In addition, rent prices generally rise over time alongside inflation, so you get more passive income if you aren’t planning to sell the property anytime soon.
Contrast that with the equity investments where investors must subtract out inflation to determine their “real” annual returns.
Real estate investing also comes with a lot of tax deductible expenses that can save you money in the long run. These expenses include but are not limited to: all renovation expenses, management fees, home office expenses, travel expenses, other ownership-related expenses, and many paper expenses.
Investors who sell properties that they have owned for longer than a year also pay the dramatically-lower capital gains tax rate on their profits, rather than their normal income tax rate. Learn more here…
Investing in real estate for retirement is definitely much better than a traditional retirement plan. There’s more upside to it invested in property as its value appreciates over time. Add on to that, it’s a form of diversification of investment.
If you still having doubts about investing in real estate for retirement, then this article written by Global Banking and Finance could be of great help in your decision making.
Is Real Estate a Good Investment for Retirement?
People dread their state of retirement. The bills to be paid, the rents to be made and payments to be done all lead to a nightmare of bankruptcy. Retirement requires a planning and strategic advancement with sufficient funds in the bank. Nowadays the market is filled with a plethora of plans for the retirees to invest in to secure their post-employment period.
Worries like how much to spend and at what frequency should they spend surrounds them. There is nothing wrong with planning before being encaged into an old body which may demand some physical rest at some point of life.
Real estate so far has been the safest option for any investor to invest in. With a focus on acute details, the gain can be multiplied through real estates. This form of investment is prevalent since the inception of human civilization making it the most trusted and mature form of investment. It comes with a variety of options for any individual to dive into. For anyone pacing towards their retirement, real estate investments are one of the most logical options to invest considering the less amount of physical and mental attention it needs. It lets the investor rest, only demanding attention while collecting money and to make few updates on the property in accordance with the technology.
Reasons, why Real Estate investment is beneficial for a retiree, is because it guarantees no loss. Only a person living under a rock has the ability to produce loss through Real estates. Depending upon person to person, profit may range but surely one can never face much loss with this investment. Unlike Stockholding, real estate investment is much safer and requires less mind-bending while investment. Although a thing to keep in mind is to not own all the properties under a single name. This may sound pessimistic but it is always good to prepare for the worst. See full post here…
Not just real estate investing is great and profitable, it is one of the safest options for investors who are afraid of high risk. In addition, it is beneficial for every retiree to invest for it incurs guaranteed no loss at all. Give it the time and it will skyrocket your retirement money.
Jeff Brown posted in CNBC the possibly of your retirement money is turbocharged through real estate. Read the article and start your journey towards preparing your retirement.
4 Ways Real Estate Can Turbocharge Your Retirement Income
- There are a number of real estate plays that can boost your retirement income.
- They include, but are not limited to, real estate investment trusts, rental-property purchases and shares in crowdfunding ventures that redo houses or buy commercial property.
- But while there are great opportunities, there are also risks, and investors must be willing to keep money tied up and weather real estate dips.
It’s not unusual: An investor five or 10 years from retirement worries the nest egg will come up short, wants a boost over the finish line but already has a typical lineup of stocks and bonds.
So what else could fuel the afterburners? Would real estate do the job?
True believers recommend a range of possible real estate plays, from real estate investment trusts to rental-property purchases to shares in crowdfunding ventures that redo houses or buy commercial property. The risks and opportunities run the gamut.
“Among all the private investment opportunities, real estate typically outperforms other asset classes and is usually less volatile,” said Brian Dally, CEO and co-founder of Groundfloor, a firm that lends investor money to house flippers and other developers. “In addition, people are familiar with the idea of homeownership, so real estate investing isn’t overly complicated to comprehend.”
“Real estate can be a great asset class and diversification tool,” said Jeffrey Feinstein, a vice president with Lenox Advisors in New York City. “It’s typically not directly correlated to the [other financial] markets and can provide income from rentals or refinancing. Hold period is around four to 10 years, so it can be looked at as a long-term, retirement-friendly strategy.”
The median price of single-family homes hit $318,000 in the first quarter of 2018, up from $257,400 in the first quarter of 2007, overcoming the losses homeowners suffered in the Great Recession, according to Bureau of Census data.
Yet after nine straight years of real estate gains, there are mounting concerns that residential real estate is nearing another bubble, and the national average does not reflect a rise everywhere.
Feinstein also noted that the investor must be willing to keep money tied up and be able to weather real estate dips — that median dropped to 208,400 in early 2009, for example. “You don’t have access to the capital at all times, unlike a brokerage account, and there’s often market risk you can’t control,” he said.
Here is an overview of the most common ways real estate can boost your retirement income. Click here to read the rest of this post…
At some point in our lives, we’ll be retiring as we age. This is the time where we’re not fit to work anymore. We need money to survive once we retire, so it is very important to prepare and plan your retirement very carefully. The best time to prepare for it is while we’re still young and working. Investing in real estate for retirement will always be a genius idea considering the time-frame and risk. A win-win situation.
If you need some money for your retirement and want to sell your house fast, Dependable Homebuyers are ready to help you sell your house fast and get the money you need. Visit us on https://www.dependablehomebuyers.com and get started.
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