How to Invest in Real Estate for Retirement

Buying a property for your retirement is today perhaps, the most popular and also, smart way to invest your money. Why?

The answer is obvious and simple. Although it takes a significant amount of money, the returns of a real estate investment are much higher than in other investments.

We know very well that in recent years we are facing an economic crisis. So it is no wonder that many investment rates have fallen, despite the efforts to stabilize the economy. Millions of people across America were forced to take a second job just to ensure a decent living standard.  Everything suddenly lost its value, and only the real estate market has regained its position, and continues to be in a continuous increase.

Everyone dreams about spending his retirement years in a quiet and comfortable place that can be called home. A place in an excellent location close to all facilities, where you can spend a peacefully retired life. You can turn these dreams into reality if you make the right decisions and you will begin to invest in real estate.

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Investing in Real Estate for Retirement

Investing in real estate for your retirement is indeed a wise move but it is highly recommended to weigh carefully every step, before buying a property.  Buying a home to live there is relatively simple, much simpler than buying a real estate in order to sell it in profit. This practice of buying and selling has become a common practice in the last years and an increasing number of people are willing to join in this business. It is true that the real estate market is full of opportunities for those willing to invest, but buying and selling a property can be more complicated than at first glance, and even more complicated than dealing in bonds and stocks.

In this article, you can find some information, advice and ways of investing in real estate.

1| Giving on Rent

Many times, you are not forced to live in the newly acquired property. An uninhabited house can be a significant loss for your budget. Therefore, it is wise to consider renting it.

You as the owner have to pay the mortgage, all the taxes and its maintenance. Renting your property can help you tremendously. In fact, the tenant will be your mortgage helper, and even if the rent does not cover all the expenses will still cover much of them. Rent is a secure income for a homeowner. It can be calculated depending on location and facilities. If possibilities permit, you can increase the rent to get a higher profit. However, it is the best if the rent can cover your monthly mortgage payment, not to mention that your property will appreciate over time.

2| Buying & Selling

Buying and selling a property is perhaps, the fastest way of making profit in the real estate market. You as an investor can buy a property from a homeowner that you can sell later for a profit. In general, the best is to buy a property that is undervalued or owner is forced to sell it quickly. You can also increase the value of this property doing some renovations. This practice is known as “house flipping” and may make serious profits for investors.

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3| Real Estate Investment Fund (REIT’s)

REIT’s is perhaps the easiest and safest way to invest your money in real estate. Real estate investment fund or REIT’s can be created by a corporation or a trust and will use the investor’s money to purchase and manage different properties. In fact this fund operates just like a stock trade. The founders of the fund (the corporation or trust) will pay 90% of their profits as dividends to the investors. RIET can be a perfect investment option for people who want a regular and secure income.

4| 401 (k) Plan

401 (k) plan is a simple and easy way for retirement, and many people believe that. However, there is a possibility to use this money and invest in real estate without actually disturbing the account. You can simply take out a loan against this account and buy a property, but you should not forget that there are some drawbacks such as:

  • – There is a $ 50,000 cap on the borrowed amount that can be even less depending on the amount in your amount;
  • – The property purchased is not eligible for tax benefits.

5| Individual Retirement Account (Roth IRA)

Anyone who lives in the US knows about the Individual Retirement Account or Roth IRA, which is indeed a great and non taxable investment way.

You can open and deposit a part of your salary in the IRA account, for your retirement. The good thing is that you can use this account to invest in real estate market.

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