Is Buying Real Estate a Good Retirement Strategy?
Almost all of us are planning to retire someday in the future. Whether that future is 5 years down the road or 40 years from now, you have to make strategic financial decisions throughout your working life to achieve a comfortable retirement nest egg. Some people are hoping to retire early if they can put away enough money.
Retirement Investment Options
IRAs and 401k plans are easy tax-deferred ways to build retirement savings. Stocks, bonds and mutual funds can be fruitful, but not without their risks. The most overlooked retirement strategy is actually real estate investment. Buying, selling and renting out investment properties is an excellent method for not only building up your nest egg, but generating an ongoing income throughout your retirement years.
Think about it. You are planning to retire in 10 years. You have the means to invest in a rental property now. If you make the right investment and manage it properly, you should be making a little extra income each month from the rent payments. That can be put into retirement savings or rolled into other good investments. Maybe you even put that money toward paying off any loan you took out to acquire the property.
By the time your retirement rolls around in 10 years, you have either put away some more money and/or paid off the income property. You can hold onto the house during your retirement and keep generating a monthly income from it to support the money you are using from your retirement savings.
Exploring Your Options
Another option is to move into the rental for your retirement. You can buy a house now that is in an area where you wish to retire. You rent it out and earn some extra income until you are ready to move in and sell (or rent out) your current house. Having two or more properties in your portfolio gives you more options for where and how to enjoy your retirement years.
What we haven’t even mentioned yet is the equity you will earn on the property. If you hold onto any real estate long enough, it is almost guaranteed to go up in value. You can borrow from this equity with a cash-out refinance, or you can sell the property and use the equity to fund your dream retirement home and lifestyle.
A Safe Investment Strategy
The truth is, real estate is always one of the safest investments out there. Any market drops are rarely as dramatic as the stock market and almost all real estate appreciates significantly over time. Whether you hold onto the rental for additional recurring income or you decide to cash out and sell the house, you should be in a great financial position if you played your cards right.
Some retirees will also look into fix and flip investment strategies. Perhaps your retirement goal is to travel and experience a number of different locations. You can buy a house in one area, and then live in it while you fix it up. When the time comes, you can sell it for profit and move onto the next location and real estate investment opportunity.
Is Real Estate Part of Your Retirement Plan?
The point we are trying to make here is that real estate is an excellent investment, especially when it comes to your long-term financial plan. If you are building your retirement plan, you should definitely consider buying some property. Almost anything you choose to do with that property will financially benefit you in the long run. Plus, it will give you more options and flexibility as you approach your retirement years. If you are interested in real estate investment, consider joining the PropertyLark home buying network. We hook you up with resources, information and analytics to help you find great houses to buy and manage your real estate investment portfolio. Fill out our buyer’s questionnaire to see if you qualify.