According to studies, the median retirement account in 2019 had only $65,000 in it. Even more alarming is the fact that that number was a 2% increase over retirement accounts in 2016. When you’re planning your retirement account, you understand how important it is to make sure that all of your needs are met and that you still have enough money to enjoy life once your career is over.
The average American retires at age 66 and lives approximately another 13 years. However, many retirees make it beyond 79 years old and live well into their 80s. With that in mind, it’s obvious that $65,000 isn’t enough to live the way that you want to live into your golden years. Fortunately, there is an option out there that can boost your retirement account and help sustain you through your post-work life so you can better enjoy your friends and family. Real estate investing is a wonderful tool for those looking for a way to increase their retirement funds.
If you go outside your home and look around, you probably see any number of homes and businesses. A ten-minute drive down the road puts you around an entirely new set of houses and commercial facilities. What do all of those buildings have in common? Someone owns them all. As long as there are people who need a place to live or a facility to operate their business in, there will be a need for real estate investors.
Someone owns every home and commercial space that you can see. In many cases, the person who lives or works in the building may be the owner, but depending on the market you’re looking at, many of the homes and business facilities may be rented out. The fact that there is always a need for real estate is what makes it such a secure investment. Yes, there are still risks associated with real estate investing, but unlike the volatile stock market, there will never come a time where people don’t need a home or a place to operate their business.
Passive Income?
Depending on what you did for a career, you may have performed physically demanding labor over the course of your career. Even if you weren’t building homes, digging ditches and doing other forms of backbreaking work, you probably got up every day, went to a job, performed a task and received a paycheck. This very normal pattern of working for money is referred to as active income. That means that you are actively engaged in the earning of your money.
Real estate investing operates the same way. You can be actively engaged in every aspect of your investment. Depending on your personal skillset, doing a lot of the work involved with real estate investing on your own can save you a lot of money. If you’ve got experience as a carpenter, you can save some money by upgrading and maintaining the property yourself. However, you will need to be fully committed to actively working on your properties instead of simply collecting a check.
If you buy a home, fix it up and then sell it, you may hire a contractor to do much of the remodeling work for you. Doing so would mean that you’re passively investing in the property. Once the remodeling is done, you can contract with a real estate agent who is responsible for marketing and selling the property for a percentage-based commission.
Real estate investing opens the door for you begin earning passive income. Depending on the investment strategy that you choose, you may not have to do anything to make money from your real estate investment.
For example, if you purchase an apartment complex, you may also reach an agreement with a property management company. This company will manage the property on your behalf for a percentage of the monthly revenue generated by your tenants. If you don’t want to be “on call” around the clock, responding to maintenance issues and other tenant questions, a property management company is a great investment.
Additionally, if you purchase an office space or other commercial facility, you can hire someone who handles any maintenance issues on your behalf or even work maintenance into the lease with your tenant, making them responsible for many of the tasks that must be performed on the facility. The method that you choose for handling the maintenance associated with your rental space is up to you. However, the less involved you are, the more it becomes considered passive income.
Types of Real Estate Investments
Depending on the are that immediately surrounds your home, there may be all sorts of investment options available to you. If you’ve spent any amount of time watching the countless home flipping shows on TV today, you may think that’s your only option if you want to invest in real estate. While that’s certainly one viable option, it’s far from the only one.
Television shows that depict an investor purchasing a rundown home, fixing it up and then selling it for a sizeable profit are entertaining, but it’s important to realize how much work goes into that property that the cameras don’t catch. Unless you’re a retired carpenter or construction worker, house flipping may be a very expensive proposition. If you have immediate access to large sums of money, there is a lot of money to be made by flipping houses in a hot market. However, buying a home, remodeling and rehabbing it and then selling it is a risky proposition. Not only does it take a long time, but there is no guarantee that you’ll be able to find a buyer at a price that nets you a positive return on your investment.
Investing in rental properties is another great option if you’re looking to build your retirement account through real estate investing. Rental properties are a wonderful option for first-time real estate investors for a variety of reasons. First of all, they give you the opportunity to earn truly passive income. Assuming that you purchase a rental property that is turnkey ready, there is very little that you have to do in order to turn a profit on your investment.
Additionally, the number of options available if you’re considering rental property investment makes it a great option. Single-family homes, duplexes, apartment complexes and commercial facilities all fall under the heading of rental properties. Once you determine what type of property is best suited for your market, you can make an informed investment that can provide passive income for years.
There is no shortage of options when you’re looking for a property to invest in. Simply gather information about what type of property is best suited for your market and make an informed investment.
No, real life doesn’t work like a Monopoly game board and you probably won’t have the funds necessary to buy up entire blocks. However, you can make strategic choices about certain areas and types of buildings to invest in that can generate the level of income that you need in order to comfortably enjoy retirement
