Real estate investing strategies for retirement have long been revered as one of the best vehicles to accumulate wealth for later in life. However, there is more than one way to invest in real estate. So which strategies are best for those with retirement in mind?
Whether you are planning on retiring at the average age and looking for some extra cushion to combat inflation or you want to retire decades ahead of the rest of the crowd, there are several strategies to consider. Regardless of your particular plan, real estate has an answer for your end game. So what are some of the options for investing for retirement today?
1. Purchasing Rental Properties
Purchasing rental properties has long been a staple in the portfolios of those ready to retire. This can include single-family rental homes, multifamily apartment buildings or even commercial real estate. When it comes to commercial property, the opportunities are endless – from parking lots to trailer parks and retail to office buildings. However, to facilitate true retirement, at some point real estate investors must have a plan for transitioning from DIY landlord to truly passive income with professional third party management.
2. Flipping Houses
Flipping houses is generally considered the best method for bulking up on cash and building a nest egg quickly. However, many also incorrectly associate flipping houses with requiring a lot of hands on daily involvement. Done right and with a good system, fixing and flipping houses can produce ongoing passive income and significant liquid wealth building.
3. Investing in Lots & Land
While this real estate investment strategy may have been pushed to the sidelines in favor of single-family homes during the last seven years, it could be an attractive option for those looking at low hassle wealth building investment alternatives. Subsequently, empty lots provide a blank canvas in which investors may choose to utilize as they wish in the future.
4. Private Lending
Private lending has been trending up. This strategy can provide both a high return on cash and valuable service for other investors and home buyers. It also helps cut out all the fluff and admin expenses of stocks and public REITs, which can eat up returns. Another alternative investment strategy in this realm is investing in mortgage notes. However, this does require some additional real estate education in order for investors to fully understand what they are investing in.
5. Vacation & Second Homes
Vacation homes and second homes can also be a part of a long term retirement strategy. In the interim, they can be used for family vacations, romantic getaways and inspirational retreats.
6. Self-Directed IRAs
Regardless of which strategies are being considered, and even for those not sure what they want to invest in yet, a self-directed IRA can offer another layer of protection, help reduce and eliminate taxes, and boost investment returns.
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