Should Real Estate Investing Be Part of My Retirement Plan?

Updated : Sep 01, 2019 in Articles

Should Real Estate Investing Be Part of My Retirement Plan?


Today we’re going to discuss if real estate
should be part of your retirement plan. And for many investors, the answer may be yes. Real estate has many potential advantages. Some of them include the potential for income:
you can receive income from rents that you collect from the properties, which makes real
estate one of the most popular assets for those seeking income. You can get appreciation. The properties can obviously go up in value. Just be sure that you understand that a property
invested in for income may have certain features, and a property invested in for appreciation
may have certain other features – and get a property that is a good fit for what your
particular objective is. There may also be tax advantages to investing
in real estate. Depending on your personal situation, what
types of transactions you’re involved with, you may be able to have very favorable tax treatment. So it’s always a good idea, if you’re going
to engage in a real estate transaction, to discuss it with your financial planner and
your tax professional, in addition to the real estate professional that’s helping you
with the transaction. You can also use leverage in the purchase
of real estate. Unlike other types of assets, you can finance
a large portion of the purchase price of most properties with a mortgage. This can be a huge advantage to put more of
your capital to work, and require you to put less down overall. Another advantage to real estate, last but
not least, is diversification. Real estate can add something to the mix of
what would otherwise likely be a pure stock and bond portfolio for many investors. This is important because it can potentially
smooth out your returns, since a real estate does not function in the same way as those
other assets. So they’re not going to have the same performances
at the same times. If one or more of those advantages sound like
something you’re looking for in your investments, then real estate might be a fit for you. For many investors at that point, the question
is, how do you go about doing it? Do you invest directly or do you invest in
some other way indirectly? If you want to invest in properties directly,
this probably means that you enjoy or at least don’t mind the day to day tasks involved with
property ownership – or you have a specific interest in specific properties. If this is not you, and you do not wish to
manage directly, preferring to delegate, you might want to look at other ways to own real
estate like purchasing a REIT, or real estate investment trust, which can give you the ability
to have access to the real estate market passively, and can be a convenient way to get some immediate
diversity that would be very difficult when owning the properties directly. If you have additional questions about how
real estate might fit into your overall retirement plan, or if you have additional financial
questions, please contact us at PureFinancial.com. Thanks for listening.

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