Supplement Your Retirement with Real Estate
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Real estate is typically thought of as a safe investment. The price of land always goes up or at least that’s what we’ve always heard. Most of the time it does. The soft real estate market and declining prices we’re currently experiencing in the U.S. is not typical. The experts believe the housing market will stabilize, and at that time land values will start to increase again.
There are many things to consider before deciding to make real estate part of your retirement portfolio. What type of property do you want to invest in – rental housing, commercial or Real Estate Investment Trusts? How much money do you have to invest and how much can you afford to lose? Do you want to be a hands on landlord or let someone else do most of the work? How much money do you need or want to generate from your investment?
There are individuals who generate supplemental income from real estate investments but there are also many losers in this field. Making money in real estate is not as easy as the late night infomercials make it appear to be. Once you get to the point where the real estate is paid for you are more likely to generate income. But unfortunately sometimes unexpected events occur and you never get there. When an individual has financial difficulties, their investment property is usually the first thing to go. Having a cushion is the best thing you can do to prevent real estate losses.
Individuals who do not want the headaches of personal property rentals or do not have the needed funds for commercial real estate investment might want to consider a REIT. A REIT is similar to owning stock. A real estate company offers shares for purchase. Their purpose is to manage income-producing properties and to distribute most of their profits (at least 90%) as dividends.
The experts recommend investing in equity REITs. They focus on real estate operations and own certain types of buildings like malls, apartments and office buildings. They have ticker symbols like stock making it easy for you to track their performance. The best feature is you don’t have to purchase the entire property. The risk is distributed among many owners.
Don’t exclude real estate as a possible way to supplement your retirement income. Answering the above questions is a good start. Consult a professional for further advice.
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