Most everyone would agree that they want a comfortable retirement. Many work hard their whole life to ensure these years are both secure and enjoyable. But achieving financial independence and stability can come through many different revenue streams, one of which is real estate investment. Although there will always be risks involved with real estate, those who play their cards right have found it to be a very fruitful source of income in retirement.
Tips For Success
Should you decide to invest in real estate, it’s advised that you polish your skill set so you can set yourself up for success. Here are some practical and accessible tools to aid in that endeavor:
- Be realistic about your skills and portfolio. If you have no prior experience investing in real estate, know your limits and start humbly. Choosing your first investments is an important step in the process so you don’t get in over your head. Should you have connections in the real estate business, don’t hesitate to reach out to them.
- Read books on real estate investing written by experts. It’s always a good idea to be well-read when investing a considerable amount of time and money into something.
- Location matters. Familiarize yourself with the area you’re hoping to buy in. Know the regions that are popular because they will continue to be in high demand even when the economy takes a turn or slows down.
Benefits of buying multiple properties
If you feel inclined to invest in real estate, there are several benefits to buying multiple properties rather than sticking with just one. A Real Estate Investment Trust, commonly abbreviated to REIT, is “an investment in a collection of properties or other real estate assets.” These REITs have a special tax status, requiring them to pay at least 90% of their income in dividends. While some REITs are risky, most are very safe and a great option for retirees who can very easily gain real income from dividends. Moreover, the process of buying an REITs is trouble-free and simplistic.
Different tax implications
There are many pros to buying an REIT, such as the substantial income they offer, but realistically, dividends are still subject to taxes (and are often taxed the same way as regular income). However, on the whole, REITs are hands-off as you do not have to be inconvenienced with property management. It is low-maintenance investment.
Beefing up diversification in your retirement plan
Diversifying your retirement plan is both an informed and intelligent decision. REITs allow many freedoms, one of which is the ability to buy multiple properties, reducing risk overall and naturally expanding your real estate portfolio.
Some may consider real estate investment for your retirement a bit of a gamble. And at times, it certainly fits that description. It takes guts to enter into something that doesn’t always have a fixed outcome, or poses significant challenges along the way. But when done wisely and with the right amount of patience, investing in real estate can be one of your most solid sources of income for retirement.