Growing Online Income

How to Invest In Real Estate For Retirement

2.14K 0

Finally, you’ve made it to retirement! Whether you have a sizeable nest egg or just a healthy chunk of savings, you’ll probably want to supplement that with recurring investment income. The best option, according to five years of Gallup polls? Real estate. These two dos and one don’t will help guide you through the investment options available for your sunset years.

DO purchase an income property.

Probably the most obvious of the real estate investment options is to purchase a second property and rent it as an income source. Generally rent costs more than a mortgage, so you wouldn’t have to pay extra because the tenants would cover the mortgage costs. If you go this route, work with a real estate agent who has the Resort and Second-Home Property Specialist designation. They can help you pick the right market, decide how much to charge, and determine if you want it to be a long-term rental or just a vacation rental. Just remember: hire a property manager. You don’t want your retirement to be overrun with the day-to-day stresses of finding tenants and being a landlord.

DO invest in an REIT.

If you don’t want the hassle of investing in real estate directly, invest in a Real Estate Investment Trust (REIT). Essentially, this means you’ll be putting money into a business that works with income-producing real estate—think apartment complexes and office buildings. You don’t have to worry about any of the intricacies that come along with owning your own place and renting it out, but you’ll also be only a shareholder, so you won’t get any say in what properties are bought or sold and for how much. Also, you’re likely to only get payouts on a quarterly basis, and those payouts are much lower than what you’d make renting your home. Another option, instead of an REIT, is to invest in a real estate mutual fund, which basically diversifies your investment portfolio into multiple REITs. These two options are generally the lowest risk investment choices.

DON’T sell your house for cash.

You maybe lured by those signs proclaiming they’ll buy your home for cash, as a quick way to supplement your nest egg for something like a round-the-world trip. But beware—the schemes aren’t all they’re cracked up to be. Essentially you’ll be selling your home to an investor, one who wants to pay as little as possible to not just purchase the property, but also to flip it and unload it for a profit. On the plus side, this means no repair negotiations, no contingency clauses, no lenders. But the negatives are that you’ll make far less money on your home, it’s a one-and-done situation instead of recurring income, and you could get scammed. It’s a bit more complicated, but a lot safer and more profitable to just rent out your house.