7 Retirement Real Estate Investing FAQs by Shelton & Tiffany Brown We’ve all heard the worst-case scenarios: pensions and Social Security benefits are on less-than-solid financial footing, and they may not provide the steady retirement income needed for your golden years. You might even be considering an alternative approach to retirement income and thinking about devising a retirement real estate investing strategy to give you solid streams of passive income — and avoid the roller-coaster of 401(k) plans which may or may not provide the financial foundation you need later in life. You might also be wondering what exactly retirement real estate investing looks like. What are the pros and cons? And how can investors develop an effective strategy to prepare for retirement, especially when it comes to finances? Here are four retirement real estate investing strategies to consider in this often lucrative (though somewhat intimidating) form of passive income generation.
Retirement Real Estate Investing Made Simple What the heck is retirement real estate investing? Retirement real estate investing is simply the process by which you accumulate real estate assets for the purpose of providing streams of passive income before or during your retirement years.
Which types of real estate investments are available to supplement your retirement income? We are glad you asked! Contrary to what many people think, retirement investing with real estate is not limited to acquiring single-family homes. There are other options used to build passive income wealth for retirement. Other types of real estate such as commercial properties, multi-family units, apartments as well as real estate investment trusts make for an awesome addition to your 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 operations. With any of these options, you should work with a trusted real estate professional. Let’s talk about the most popular one first, single-family homes. You can reap the benefits of owning a home in two ways: •
Fix and Flip: This is a very popular method to quickly collect funds for your retirement. It involves the purchase of a home, making repairs and updates, then selling it for a profit. Repairs may take several months to complete, but once your sale is done, the proceeds are paid to you in one lump sum. You can save the money or reinvest it into another deal to grow your retirement nest egg.
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Rental Property: It’s no secret that real estate continues to appreciate or increase in value over time. That means that what you buy today should be worth more tomorrow. If you choose to buy property and lease it out, you can price it to cover the mortgage expenses plus an additional income for yourself. Instead of receiving one big payout, you would be receiving monthly payments from your tenant(s).
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-andhold rental properties that bring in consistent cash flow (without having to expend any additional effort).
