Real Estate Investing:
Why You Should Consider Holding Real Estate In Your Retirement Portfolio
As we all get older and start to reach the end of our working careers, many of us start to think about retirement. We day-dream about what our retirement will look like and the freedom that we will have when we no longer have to “work”. The reality however, is that unless we take steps earlier in our lives to prepare for retirement, the retirement we experience will likely be a lot different than the one we had dreamed about.
When planning for retirement, the sooner you start the bigger advantage you have. It can be hard to make those extra contributions to your 401k or to buy a rental property in your 20's when 65 can seem so far away and you have your sights set on that nice new car. What you need to keep in mind is delayed gratification and the power of investing. Having a plan and being diligent about your finances and goals early in your career will help you to reach that “dream” retirement that you want, and probably sooner than you think.
I believe that Real Estate is one of the keys to truly "passive" income and should play a role in everyone's investment portfolio. If you do your due diligence and analysis on the properties that you purchase as investments, they can provide a steady, reliable income stream that can support you for the years to come after retirement.
There are many different strategies available when investing in real estate, and there is no right or wrong way, it depends on each persons needs and wants. From buy and hold single family residences, flipping, vacation rentals, commercial properties and more, there are opportunities everywhere. Each strategy has its positives and negatives, it is important to educate yourself on the risks that each strategy has and be sure that you are comfortable with them before taking the leap.
If you are looking for a hands off investment that generates cash flow with little to no involvement from you, rental homes or units may be the way to go for you. With this type of investment you can be a landlord but you don't have to. In fact, paying a property management company to manage the property for you may be well worth the free time and peace of mind it affords you with not having to personally deal with any issues that arise. The important part with this is to make sure that you have a trusted property management company that will do a good job of screening tenants, collecting rent, and ensuring that your asset is properly maintained.
The same can be said regarding vacation rentals and commercial property, there are just different risks associated with them. These can be self managed or you can outsource to a property management company. Properties like this could be rented out throughout the entire year to vacationers, or they could be available for a portion of the year and utilized the remainder of the time as your personal vacation home.
If you are looking for a more active approach, flipping may be for you. Flipping is where a home is typically purchased below market cost, and is usually a property that needs anywhere from a little to a significant amount of work. It is important to do in depth analysis and inspections of the property before getting into this type of investment, as there may be hidden issues that can become extremely costly. Once the renovations are complete the property is then sold and if you've hit or come near your projected analysis, you should expect a profit.
No matter what approach you take to planning your retirement, it is important to get started early. Starting to build your portfolio and experience in your 20s and 30s can set you up very nicely when it comes time to retire. Just be sure that you are following the markets that you are in an are properly maintaining your assets.
We personally invest in Real Estate, and would love to share our experiences first hand with you. If you are interested in learning more about our personal investment plans and goals, need encouragement to get started on your own, have questions, or simply want to connect, please reach out in the comments below! We'd love to hear from you.
The above real estate information on Real Estate Investing: Why You Should Consider Holding Real Estate In Your Retirement Portfolio was provided by John and Melissa Steele. John and Melissa can be reached at firstname.lastname@example.org or by phone at 619-887-4429.
Considering buying or selling a home? John and Melissa of Steele San Diego Homes have a passion for Real Estate and would love to share their expertise with you!
Steele San Diego Homes services all of San Diego county and also works with out of area clients to connect them with a strong local agent. Whether you’re interested in buying, selling, investing, or just want to learn more, John and Melissa Steele are here to help you.