8 Ways to Invest in Real Estate for Retirement

Happy senior couple retirees homeowners
Syda Productions / Shutterstock.com

This story originally appeared on NewRetirement.

Let’s get real about investing in real estate for retirement.

Investing of any kind can be complicated at any point in your life. However, investing in or near retirement can be especially arduous. At retirement, you need your assets to be relatively free of risk while keeping pace with inflation. In many cases, you need your assets to provide income. And, you want to minimize taxes and costs.

And it is not something you can afford to get wrong. Most of us need the money we have accumulated over our lifetimes to fund our golden years.

So, is real estate a good investment at this stage in your life? It all depends. What are your interests? What kind of money do you have to invest? What are your financial goals? What kind of lifestyle considerations might come into play?

The Key Benefit of Real Estate for Retirement

Happy man with money and a house
Ljupco Smokovski / Shutterstock.com

Real estate is an asset class with high returns. It also usually offers a hedge against inflation. Since real estate has historically been inversely correlated with conventional assets, it can be a good way to diversify your investments away from the stock market.

Let’s take a look at eight ways to invest in real estate for retirement:

1. Own Your Own Home

Happy homeowner
Sean Locke Photography / Shutterstock.com

For most people, their home is their most valuable asset — worth more than their savings.

However, this asset is not always thought of as a way to help fund retirement.

There are so many different ways to utilize your home equity to generate retirement income or hedge against unknown risks — from downsizing to leveraging equity to fund a long-term care need and more.

Learn More: How to Use Your Own Home Equity for Retirement Income, Cash, Leverage or a Back-Up Plan

2. Real Estate Investment Trusts (REITs)

REIT
designer491 / Shutterstock.com

A Real Estate Investment Trust (REIT) is an investment in a collection of properties or other real estate assets. It’s kind of like a mutual fund but instead of a collection of company stocks, it is a collection of properties. REITs have a special tax status that requires them to pay out at least 90% of their income as dividends. There are many types of REITs — some have very high risks (mortgage REITs, which are investments in mortgages) but most are quite stable (equity REITs, investments in actual properties).

Pros:

  • Dividends: The dividends paid by a REIT can offer real income to retirees.
  • Easy to Get Started: It is easy to buy a REIT — it is like buying a stock or fund.
  • No Hassle: With a REIT you get the benefits of real estate without the hassle of buying and managing a property.
  • Less Risk Through Diversification: Instead of owning one or a few units, a REIT allows you to diversify and be invested in multiple properties, which reduces risk.
  • Liquid: You can sell your REIT investment almost instantly, unlike rental properties.

Cons:

  • Taxes: Taxes can sometimes be burdensome on REIT dividends since they are taxed as ordinary income.
  • Low Principal Growth: Because REITs pay out 90% of their profits in dividends, your money is not getting reinvested. Furthermore, real estate is generally not an investment that explodes in growth.
  • Not Much Control: If you are someone who wants hands-on management, a REIT may not be appropriate.

3. Buy, Improve, Flip

Couple involved in home renovation
Zivica Kerkez / Shutterstock.com

“Flip or Flop,” “Love It or List It,” and “Fixer Upper” are just a few of the many popular TV shows that showcase the ins and outs of buying, fixing, and reselling houses for a profit.

Flipping, also called wholesale real estate investing, is when you purchase a property not to use, but with the intention of selling it for financial gain.

Flipping can certainly be a profitable venture. It can also be a very good way to lose money, especially if you don’t have the right assets, skills, and know how. You need real estate knowledge, home improvement skills, access to cash, some financial expertise, and maybe a bit of luck to successfully flip properties.

4. Purchase Residential Property and Rent It Out to Long-Term Renters

Monkey Business Images / Shutterstock.com

This is what most people think of when they think of real estate investing — buying a property and renting it out.

The trick is that you need to consistently have tenants who are willing to pay enough for you to cover any mortgage you have on the property plus: insurance, taxes, and maintenance.

The most important aspects to consider are property location and market rental rates.

Pros:

  • Opportunity for above-average returns on your investment. Rental property can perform much better than investing in the stock market.
  • Cash flow in the form of monthly rent.
  • A hard asset: Real estate almost always has value and usually appreciates over time.
  • There can be significant tax benefits to owning a rental property. Talk with an adviser, but you should be able to deduct interest, taxes, insurance, and other property expenses and usually deduct losses against other income.

Cons

  • Managing a rental property can be time-consuming and stressful. You need to be capable of taking care of problems with the home and deal with your tenants’ ability to pay and any vacancies that might occur.
  • It requires significant upfront capital to purchase a rental property.

5. Purchase Commercial Property and Rent It Out

commercial rental space
SeventyFour / Shutterstock.com

Experts suggest that owning commercial property can be more profitable than residential real estate. However, it can also have more risk, be more complicated (juggling multiple tenants), and require a bigger cash outlay.

6. Purchase Commercial Property and Run Your Own Business

zjuzjaka / Shutterstock.com

Who has dreamed of retiring to an island and running a little grass shack bar in the sand? (It’s not really just me, is it?)

Whether you have ideas about a beachside rum shack, a bed and breakfast in Ireland, a fishing shop in Belize, a bookstore in your home town, or some other retirement business, the real value of your venture can often be in the real estate itself.

The biggest expense of most brick and mortar businesses is the real estate. So, owning the property could increase your long-term wealth and monthly income.

7. Buy a Vacation Home and Rent It Out Part-Time

goodluz / Shutterstock.com

Owning a vacation property as an investment usually means that you rent it out to tenants for shorter time periods. If you have the right house in a desirable location, you might be able to make as much money from a few vacation renters as you could from a year-round tenant elsewhere.

And, maybe you can enjoy some time there yourself!

Besides the general pros and cons of owning rental property, there may be additional considerations for a vacation rental:

Pros:

  • Rentals might be more predictable in highly desirable locations than other types of rentals.
  • You may be able to enjoy the home yourself.

Cons:

  • Vacation rentals can be particularly expensive.
  • Because many vacation rentals are seasonal, your window for making money from the rental may be limited and therefore riskier.
  • If you are not living in the area, you might need to hire someone for maintenance and management.

8. Crowdfunding

Crowdfunding hands with money
Prostock-studio / Shutterstock.com

Crowdfunding is a relatively new way to raise money for a business venture. The idea is that many people invest a small amount into a particular project. The crowdfunding concept is becoming an increasingly popular and low-cost way to invest in real estate.

Let’s say that you want to invest in residential rentals and think the ideal property is a 10-unit building, but you have nowhere near the assets to make that kind of investment. Crowdfunding allows you to participate in that type of venture — without the huge capital outlay or the hassle of buying and maintaining the property yourself.

Matt Rodak, CEO of Fund That Flip, explains crowdfunding like this: “Real estate crowdfunding provides investors the ability to individually select each property they wish to invest in. This allows investors to be more selective on a project-by-project basis and build a custom portfolio aligned to their specific investment objectives.”

Here are a few real estate crowdfunding sites for you to browse: Realty Mogul, FundRise, GroundFloor. And these following options are for accredited investors: Origin Investments, AlphaFlow, and Equity Multiple.

Pros:

  • Investors get access to the real estate market with small amounts of money.
  • You can choose which real estate projects you want to invest in and sometimes have a voice in the project.

Cons:

  • Some crowdfunding opportunities are only available to accredited investors.
  • Crowdfunding requires more industry knowledge than investing in a REIT (though less than investing in a property yourself).
  • The investment risks are the same as for any real estate investor. If the market goes south, an investor will likely lose money.
  • There is far less liquidity in a crowdfunding investment than with a REIT

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com

Messy Tahoe Home Filled With Mannequins Is the Week’s Most Popular Home

A wild residence in South Lake Tahoe, CA, crammed with clutter—including dozens of dead-eyed mannequins dressed in evening wear—is the week’s most popular listing on realtor.com®.

The home ticked all the boxes for the kind of listing designed to be shared far and wide across the web. Unassuming exterior? Check. Listing details with no acknowledgment of the weirdness within? Check. Photos that defy easy description—and leave you with more questions than answers? Check!

Carefully posed throughout the house, with at least one mannequin sprawled across a rug wearing nothing, these eerie ladies—and at least one gentleman—serve a dual purpose. They force you to take a closer look at the listing for an otherwise humdrum duplex and serve to distract from the messy kitchen and bathroom.

The combination was enough to send the listing ricocheting on social media.

Bold move.

Mannequin mania
Mannequin mania

realtor.com

But that wasn’t the only off-the wall listing racking up clicks this week.

A Pennsylvania home with painstakingly customized interior touches—including rounded doorways, a honeycomb-style grand staircase, and floating light fixtures—grabbed your attention, as did a Disney-themed home in Disneyland’s home town.

Other popular picks this week included a pair of dreamy celebrity properties: the historic New Orleans home of a politically polar-opposite power couple, as well as A-lister John Travolta‘s 43-acre oceanfront Maine estate.

There’s a lot going on this week. Scroll on down through the list, and take it all in for yourself.

Price: $3,380,000
Why it’s here: No partisan bickering here. We love this house. The sellers, political consultants James Carville and Mary Matalin, are staying in NOLA but have decided to downsize from this 8,279-square-foot Colonial Revival home.

The massive home was built in 1906 and has been updated to perfection. The quarter-acre lot is described as a “tropical oasis,” filled with gardens, mature shade trees, a terrace, a pool, and fountains.

New Orleans, LA
New Orleans, LA

realtor.com

———

Price: $197,000
Why it’s here: This is for a buyer looking for something outside the box. Surrounded by 8 acres of privacy, it’s a legitimate, two-bedroom treehouse. There’s a fairly large caveat: The place isn’t finished.

The raised octagon has an open second floor, a deck, and a shop with kitchenette. The home is outfitted with electrical and septic systems and well service, but needs to be completed by a buyer with big dreams.

Cortland, OH
Cortland, OH

realtor.com

———

Price: $195,000
Why it’s here: Sitting on just over a half-acre at the top of a hill, this stone house from 1890 is a classic. The five-bedroom home comes with a four-car garage, lookout tower, original hardwood floors, curved interior walls, and updated bathrooms—for a combination of charm and convenience.

Ithaca, NY
Ithaca, NY

realtor.com

———

Price: $1,399,999
Why it’s here: This curious five-bedroom house is all angles and sharp edges from the outside, but the interiors were designed with curves in mind. The contemporary home features custom effects like the butterfly-wing entry staircase, rounded doorways, and floating light fixtures that suggest sand dollars from space.

Although it was designed for a very specific taste, the home, from 1987, is upscale, with a saltwater pool, kids playhouse, whole-house generator, and many upgrades.

Southampton, PA
Southampton, PA

realtor.com

———

Price: $535,770
Why it’s here: Known as the O’Leary mansion, this historic brownstone dates to 1890. It was built by James Patrick O’Leary for his mother, Catherine O’Leary—the woman considered to be responsible for the Great Chicago Fire of 1871.

Today, the four-level, 12-bedroom home is in need of repair and is being sold as is. It still has much of the original woodwork and moldings, as well as walk-in vaults and a two-story coach house.

Chicago, IL
Chicago, IL

realtor.com

———

Price: $700,000
Why it’s here: This hideaway on 11 acres is just steps from the Ice Age Trail, and includes a three-bedroom home built in 1991. Highlights include a large kitchen, a living room with cathedral ceiling, log beams, a stone fireplace, and wet bar.

There’s a heated shop off the garage, a private pond, a new roof, as well as a number of other recent upgrades.

Hartford, IL
Hartford, IL

realtor.com

———

Price: $255,000
Why it’s here: Although this storybook home hasn’t been featured on HGTV’s “Home Town,” that didn’t stop folks from clicking. Built in 1929, the three-bedroom residence recently had a stylish makeover, including new paint, windows, and refinished floors.

Laurel, MS
Laurel, MS

realtor.com

———

Price: $835,000
Why it’s here: Built in the shadows of Disneyland, this ranch home has been decked out as an homage to all things Mickey Mouse. Happiest Airbnb opportunity on Earth?

The custom Disney designs are so spectacular, the four-bedroom home was featured on the Discovery Channel. Besides the decor, the home includes a heated pool, custom carpets, and a toddler-safe playroom floor.

Anaheim, CA
Anaheim, CA

realtor.com

———

Price: $5,000,000
Why it’s here: This 48-acre oceanfront estate is being sold by actor John Travolta. The massive 20-bedroom mansion was featured in Architectural Digest in the 1990s and has been recently renovated.

The extraordinary property includes a deepwater dock, open fields with ocean views, a third-floor children’s space, and a detached barn used for car storage.

Islesboro, ME
Islesboro, ME

realtor.com

———

Price: $650,000
Why it’s here: Nondescript from the curb, this five-bedroom residence made waves this week, thanks to the mannequins staged throughout the property.

Most of the mannequins are dressed in evening gowns—adding to the mystique. Built in 1962, the place could use some work—and a lot of tidying up. There’s no word on whether the list price includes the mannequins and/or their glittery gowns.

South Lake Tahoe, CA
South Lake Tahoe, CA

realtor.com

Source: realtor.com

Discovering a new favorite restaurant with the Amex Gold dining credit

Discovering a new favorite restaurant with the Amex Gold dining credit


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320: Wayne Turner: How to Sell to Taylor Swift and Start All Over Far Far Away

Wayne Turner is the Broker/Owner of Turner Real Estate Group based just outside of New Orleans in Mandeville, LA. Wayne began his career 20 years in his home town of Nashville, TN. In 2008 Wayne met his wife Rachel at a Howard Brinton convention in Orlando, FL, and in 2009, Wayne liquidated everything, sold his office building to Taylor Swift and started all over in a new town where he knew no one. Fast forward to now, Wayne runs a team of 10 who lists and sells more than 350 homes a year.

Join us as Wayne shares his Realtor mindset and a glance at his journey to becoming a Real Estate Rockstar by making real estate dreams a reality everyday.

Learn more about your ad choices. Visit megaphone.fm/adchoices

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