Real Estate Investing for Retirement
Whether you want to retire early or simply want a retirement plan for the future, you have made it to the right place. Real estate investing will definitely guarantee you a secure and convenient retirement – if you put the effort in.
There are several advantages to real estate investment in general that make real estate investing for retirement even more attractive. You are probably familiar with tax advantages that come with the rental property. Rental properties receive tax deductions on several expenses such as depreciation and insurance. Also, rental property expenses are tax deductible. These tax advantages will help increase your rental return.
What the heck is retirement real estate investing?
Retirement real estate investing is simply the process by which you accumulate real estate assets (in the form of rental properties) for the purpose of providing streams of passive income — mostly through rent paid by tenants — during your retirement years.
How does this approach differ from typical real estate investing?
While real estate investing as a wealth-building strategy on the whole focuses on different areas of cash generation — such as wholesaling, rehabbing, and the acquisition of rental properties — real estate investing in a retirement context usually is centered on just one branch of this technique: the accumulation of buy-and-hold rental properties that bring in consistent cash flow (without having to expend any additional effort).
Which type of real estate is a good fit for retirement investing?
A better question is what type of real estate is not a good fit for retirement investing. To which we would humbly say we can’t think of one.
Contrary to what many people think, who start retirement investing with real estate, single-family homes are not the only way to build passive income wealth for retirement. Other types of real estate, such as commercial properties, retail, multi-family, and apartments, make for an awesome addition to your passive income portfolio.
The key, as with all areas of investing, is to diversify your assets and ensure you keep an eye on all the areas of your financial operation.
What makes real estate such a powerful retirement investing strategy?
Aside from the expected passive income cash flow — which we’ll tackle in just a moment — there are three key advantages that retirement real estate investing has over other investing strategies, such as investing in the stock market or building up the coffers of your 401(k).
- There are huge tax advantages to owning rental properties, including the cost of repairs, depreciation, interest, and travel. If set up properly, your real estate investing business can help reduce your tax liability — and save you many of the needless fees that accompany many other forms of generating income for retirement, such as investing in the stock market or contributing to a 401(k).
- Pay off the mortgage of your rental property — with other people’s money! Namely the rent paid by a tenant. The patient real estate investor realizes if they plan accordingly, and let simple compound interest take over, that they can (over the course of a few years) acquire a powerful passive income stream, with little or no money out-of-pocket.
- As assets go, real estate generally appreciates in value. Now, this isn’t to guarantee that real estate you purchase will positively increase in value. There are always fluctuations in market value. But if you choose a good location, and invest in a solid property with potential, then you’re more than likely to not only see an increase in cash flow, but also net worth.
Investing in real estate can definitely give a person ‘passive income’ for retirement and even into the twilight years where they may be living in a Prescott adult care home.
Talk to experienced real estate investors and share your plan. Get their feedback and advice, revise your plan/strategies and start the first steps. See if you can get an experienced real estate investor to agree to mentor you. Perhaps you can volunteer to work a few days in their office in exchange for training. This will help you significantly.
Once you begin, make sure you are making enough money to live on, and then enough money to invest in additional properties. After a while, you should see your money start to grow exponentially. Then you are on your way to a happy retirement.
RE/MAX Mountain Properties
731 W Gurley Street / Prescott, AZ 86305