Whether you’re looking to supplement your retirement savings with real estate returns or build a portfolio of diverse investments for retirement, real estate is a solid choice for where to put your money.
Many retirees even venture into real estate investing as another career path post-retirement to keep their minds active.
Regardless of whether you’re currently retired, approaching retirement age, or far off from that point in life, thinking about real estate investing as a retirement strategy is smart.
What You Should Know About Real Estate Investing For Retirement
1. The usefulness of real estate is good for some.
When stocks are up, your retirement nest egg grows. But when there’s a downturn, suddenly diversification of assets is something people wished they’d considered more seriously.
As this US News & World Report article states: Real estate is useful as abuffer against the ups and downsof the stock market. A portfolio that’s concentrated in stocks and bonds may be more susceptible to volatility in the markets. Adding a rental property into the mix spreads out your risk exposure, providing some insulation against downturns.
2. Rentals create recurring income.
For real estate investors seeking investment income during retirement, it doesn’t all have to come from a pension or 401K. Rental properties return month-over-month recurring income for people before and during retirement.
Of course, you have to buy a rental property, first, and ensure the finances work out in a way that’ll earn you the returns you’re seeking. But for investors looking to become landlords, rental property strategies can be multiplied and earn retirees handsome monthly income when done right.
Rental properties can also grow earnings when they’re located in hot markets. Ryan Coon, co-founder and CEO of Rentalutions, an online property management platform for landlords, says that real estate is an asset that “rises with the tide.” As inflation pushes the prices of goods and services higher, rental rates can be raised accordingly.
3. Use the BRRRR strategy to protect your cash outlay.
The BRRRR strategy is appropriate for new real estate investors, as well as seasoned ones. Because of how the strategy protects one’s cash from getting tied up in a property for a large length of time, investors often find they can repeat the strategy again and again.
The BRRRR method is a powerful way to grow a portfolio. Normally if you want to buy multiple properties, you have to save up each time for the down payment, as well as any money for the rehab. But with BRRRR, you don’t have to wait to save up the down payment and rehab capital for each subsequent property. You can save up for it for the first property and then use the money from the refinance for future purchases.
This is attractive for those thinking of flipping homes during retirement. It can be a wonderful strategy to build upon wealth quickly.
4. Establish generational wealth.
A real estate business is just that – a business. And for people thinking about or entering their golden years, the legacy they leave their children and grandchildren is often top of mind.
Real estate investors can pass on property from generation to generation, conceivably making their descendants’ lives a little bit better. Think about all the college graduates nowadays who are complaining they will never be able to afford a home like their parents due to exorbitant prices.
A real investment portfolio is something that can be turned over to a child or family member to either be managed as a business, or property can be gifted to be resided in by your loved ones.
5.Get a glimpse at the numbers.
If you’re considering investing in rental properties to aid your retirement, or if you’re considering flipping houses during retirement, you want to make sure you’re making sound financial investments either way.
AshmorePartners has written comprehensive guides on calculating ROI for both fix & flip and buy & hold property investments:
Work With Ashmore Partners, The Best Hard Money Lender Serving PA, NJ, DE All clients work directly with an Ashmore Partners co-founder to ensure stellar advice and consultation by experienced real estate investors. Our rates have no junk fees and no hidden fees. All clients receive access to our profit calculator to estimate your costs and gain visibility into a projected investment return.