Should I Be Adding Real Estate To My Retirement Portfolio?
Currently, there are many ways you can boost your retirement portfolio. You can opt for stocks, shares, cryptocurrency and also real estate. If you are constantly wondering whether to include real estate in your retirement portfolio, here is the best advice to consider.
- It Has Been Tried Successfully
Making an investment is a risky move unless you have all the facts. Well, if you are considering investing in real estate, you should know that there are many people have tried it and have been successful. If you make a quick search online, you will find that most of the richest people in the world have their own stake in real estate. It is a tangible investment that can increase your retirement portfolio considerably, so it is hard to dispute the facts.
- It Is A Sustainable Investment
One of the reasons why real estate is the best investment for your retirement portfolio is because it is sustainable. Each day, children are being brought into the world with an average of 11 seconds for every new birth. If you do the math, you will find that people need houses and you can provide that at a profit. If you take good care of your property or hire a property manager, you can relax and watch it make money for you.
Even better, you can increase your equity and enjoy numerous tax benefits from a real estate investment. Note that, rent rates are increasing tremendously and you will be making more money, as long you reposition your real estate assets to the emerging markets.
- Investment Control
With other types of investments, especially those mentioned above, it’s tough to get enough control over it. Well, that’s not the same with real estate. Although there isn’t instant liquidation, compared to other investments, you have complete control over the operation and growth of the investment. If you are not receiving enough money from your real estate property, you can always make a few upgrades and increase the rent.
Keep in mind that it might be tough to sell your real estate investment, but you can always do so when the market is right. If you make a profit from the resale value, it is easy enough to reposition to the next emerging market. Therefore, you have control over what to do or not do so as to get more money from your investment.
- Residual Cash Flow
Since tenants pay their rent every month, you can handle any expenses from the same amount comfortably. Whatever is left will be the positive cash flow. The best advantage is that you have fixed expenses and your cash flow, with annual rent increases will keep at par with inflation. Eventually, when you choose to retire, you will have enough money to do whatever you want, including investing in more real estate.
- Tax Deductions
Investing in real estate has a few benefits including tax deductions that reduce your tax liability every year. You can depreciate the property to add tax incentives that will reduce the overall tax liability from your main source of income. If you are thinking about investing in real estate, you should talk to your tax attorney or accountant about the benefits you can enjoy. You can make a lot of savings when tax season comes around and by increasing your properties, you can reduce the liability even further, something not found with other investment options.
- Increasing Your Equity
Most people overlook the fact that investing in real estate increases your equity since it is a passive income stream. However, there are various income streams from real estate. For instance, if you use leverage or finance the property, the tenant will make a mortgage payment on your behalf from which the portion reduces the overall principal amount. By reducing the principal amount of your mortgage, it will be reinvested as positive cashflow when you eventually sell the property. Therefore, you are building equity every month, a benefit not available with other investment choices.
- Appreciation
A lot of investors consider the growth of property value to be the number one way of increasing your wealth with today’s economy. That’s what every potential investor is looking for in an investment. The buying and resale value of real estate property makes a huge profit, thanks to appreciation and that’s a solid way of making a lot of money, even in retirement.
- Leverage
It is a unique factor only present with investments in real estate. It can be described as the ability to finance your investment by allowing the tenant to repay it while you are enjoying the appreciation benefits from the borrowed amount. Through leverage, you can repay the expenses and improve your property to continue getting more money each money from your tenants.
- Savings Plan
If you have a savings plan, you know how tough it can be to continually add to it. If you generate a down payment for a particular investment, you can use leverage to increase the investment and create your own savings plan comfortably. You can sit back and watch your savings increase and actually become interested in saving more money. Compared to a regular savings plan, real estate investment has more speed and size allowing you to save more money each month, thus keeping you motivated.
- Influencing Performance
Since real estate is a tangible asset, you can do anything to your property to improve the performance of your investment. For instance, you can replace a leaky roof, improve the exterior of the building, find new tenants to make sure your building has high-quality tenants and much more. You have too much control over the performance of your investment compared to any other choice of investment options.
In conclusion, investing in real estate has too many benefits that shouldn’t be overlooked compared to other types of investments. Make sure you do enough research with Live love at home real estate, to determine the right type of real estate investment to do and the perfect location to maximize your outcome. It is the best choice of investment for your retirement portfolio.