Have you wondered about real estate investment? Well, when it comes to saving for the future, you need to be smart. Investment allows for a continuous income even when you retire. Although sometimes, inflation disrupts your retirement portfolio causing its value to diminish; you’ll need a back up plan to boost your retirement which is real estate.
Property investors retire with the help of investment properties all the time. However, achieving this goal is not an easy and will take time. So how do they do it? Continue reading to know what you need.
Related: Traits of Successful Real Estate Investors
Passive Income
Real estate investing is income generating and can be a good long term plan if the value increases overtime. Property investors receive passive income in the form of monthly rent which they collect from tenants renting their investment property.
This steady rental income is a real estate investor’s best friend when it comes to retirement plans. It helps in paying mortgage payment and is debt-free. If a real estate investor makes smart investment decisions, they can live on this rental income and retire completely.
However, in the beginning, you won’t be seeing a lot of the money. When you buy the property, you’ll have to finance it with a mortgage unless you pay cash. This means part of your monthly income will have to cover your mortgage payments. Additionally, a real estate investor has to pay for things like property taxes and insurance, not to mention other expenses such as costs of repairs and maintenance. The key is patience.
By the time they retire, property investors will have paid off their mortgage, and they’ll start getting the rewards they’ve been waiting for. They can choose to further continue renting out their investment property and make a stream of income, sell the rental property for a profit, or just live in it.
Tax Benefits
Making money by investing in real estate is great but what is greater is tax deductions. There are property taxes to be paid but there are certain tax benefits and mortgage interest deductions provided to property investors.
For example, the rental income which the rental property generates is only taxed 10%.
Exactly how much a real estate investor can deduct depends on their rental income. Nevertheless, no one can deny the positive impact that tax deductions will have on a real estate investor’s wealth and the amount of money they will save, whether for retirement or career purposes, which is another reason for why is real estate a good investment for retirement.
What you need:
Knowledge
You can not give away your money to something you do not understand. Real estate investing is like any other investment you need enough knowledge to venture into it.
Firstly, you should familiarize yourself with every aspect of the industry such as what makes certain locations good places to invest ? Which type of property investment yield the highest return on investment and how to find them? which investing and financing strategies work best for the specific property and help you achieve your goal of retirement through real estate?
Having prior knowledge helps property investors be aware of risks of real estate investing and how to reduce them.
Related: Important questions to ask your real estate agent before purchase
Invest more
When it comes to investing, the more you invest the better even in real estate. Having more investment properties means multiple passive income sources as well as reduces the risks that comes with investing. Property investors can grow their investment portfolios by investing in different types of investment properties through following different investing strategies and investing in different locations.
Invest long term
The effecient way to secure retirement through real estate is by long term investment as they generate passive income for a longer period. The best and popular way is the buy-and-hold.
Simply buy the property and hold for a period of time while it appreciates in value. This strategy benefits property investors in two ways: the rental income collected from monthly rent and the profit made after selling the rental property. This strategy emphasizes on why real estate investment is good.
At the end of the day real estate generates passive income and provides tax benefits which allows for creation of wealth. However, rewards come from effort and planning. The best way to secure retirement through real estate investing is by gaining enough knowledge and experience in the market.
