6 Real Estate Investments That Could Speed ​​Up Your Retirement

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There are many paths to follow to build the wealth needed for a comfortable retirement, and you don’t have to take just one. In fact, it’s probably not advised.

Diversification is an essential principle for investing. Stocks, bonds and other fixed investments should be an important part of your retirement strategies, to varying degrees over time, just like real estate.

Real estate investing is a huge field in itself, with the ability to be as hands-on or third-party as you want, from fixing a rollover to losing years of income from properties you don’t even own. .

Here are six investment areas for inspiration to consider as you paint your own picture of an affordable and enjoyable retirement. Choose well and do them well and you might find that your retirement date comes sooner than you expected.

Image source: Getty Images.

Your own home

For most homeowners, their home is their biggest investment. Downsizing that empty nest is a proven way that millions of people have used to help fund their retirement. How much help depends on its value, of course, and it depends on price appreciation over the years.

Home prices rose at a record pace over the past two years, but the story was already there. A recent study by Better Mortgage found that median home prices rose 43% during the 1970s, for example. And from 1950 to 2020, price growth has been around 326%. Prices are high now, but the potential is there for them to rise further, and you could take advantage of them if you choose well and, to some extent, fortunately.

turn this house over

Returning home has become a cultural phenomenon, the subject of many blogs and reality TV shows. How much you earn depends on how much work you can do yourself, how much you can sell it for, and first of all, how much you spent on the place.

Rising house prices and historically low foreclosure rates have made it harder to find bargains, especially in the country’s hottest real estate markets, but there is still money to be made. In its latest U.S. home flip report, ATTOM Data Solutions, a major real estate numbers cruncher, says nearly 6% of all single-family home and condo sales in the third quarter of 2021 were flips. They said the return on investment over the original purchase price averaged about 32%, yielding a typical profit of around $68,500.

Short term rental

Airbnb and Vrbo and the like are relatively new developments, but there are millions of success stories of landowners knocking money out of their homes, condos, yurts and yachts.,

The appeal of these platforms is that they handle the bookings and billings for these properties, but you’ll still have to do the maintenance and cleaning yourself – or pay someone else to do it – and the regulatory and legal landscape for these types of rentals can be problematic depending on where you operate.

Longer term rentals

There are many ways to own rental property, including buying a house or condo outright and owning or joining with others in a Real Estate Investment Group (REIG).

If you choose to become a direct owner, keep in mind that you will have to choose the degree of activity with which you wish to manage the property, including collecting rent and managing maintenance. Of course, the more you do yourself, the more you’ll get from your investment, as you’ll see its value appreciate over the years as you approach retirement.

Real Estate Investment Trusts (REITs)

REITs own and manage portfolios of income-producing properties. They are required by tax law to pay out at least 90% of their taxable income to shareholders, and there are about 225 that are publicly traded. There are also unlisted REITs.

REITs typically specialize in a specific type of property – industrial, commercial and residential, for example – and they can be very rewarding both as long-term investments leading into retirement and as sources of passive income. after retirement. REITs have historically performed on par with S&P500 and better than small cap stocks over significant periods.

Crowdfunding

Crowdfunding is another relatively new development in real estate investing. There are a number of online platforms that allow you to invest in either partial ownership of existing and developing individual properties or non-traded REITs. Minimum investments can range from hundreds to hundreds of thousands of dollars.

Many platforms do a lot of online advertising and boast great rates of return that could well speed up your retirement. Do your due diligence. Keep in mind that they aren’t as liquid as buying publicly traded REITs or other real estate-related stocks, but that could be a good thing if you really want to buy and hold and leave that egg in your nest grow over time.

Real Estate Index, ETFs and Mutual Funds

There are hundreds of options here for investing in real estate through the public markets. One of the most prominent examples is the $42 billion Vanguard Real Estate Index ETFan exchange-traded fund that invests in a weighted collection of REITs.

There are dozens of other iterations on this theme, including funds that invest in a wide variety of real estate-related assets that could include REITs, other real estate operating companies, and securities guaranteed by such investments, just to start.

Time Is Money: Real Estate Investing Can Help You Maximize Both On The Road To Retirement

One of the maxims of successful real estate investing is that finding a cheap property is good, but finding a good location is even better. This also applies to investing for retirement.

Choosing well where to put your money – then adding it and letting it grow while felling and harvesting only when needed – should prepare you when it’s time to stop working.

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