How to Utilize Real Estate in Your Retirement Portfolio
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Loading... - Angela Majok
- 20 Apr 2023
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Here's why owning real estate can be a great addition to your retirement portfolio and several ways you can utilize it.
Owning investment real estate to generate income during retirement can be a valuable addition to your portfolio. There are several ways to utilize real estate in your retirement portfolio. In this article, we explore several ways owning real estate could be incorporated into your current balance sheet and become a major part of your retirement plans. We will break down the different options you have and list a few pros and cons as well:
Supplemental income stream
The most common way to make real estate a contributing factor in your retirement portfolio is owning rental real estate as a supplemental income stream. Let's break down the pros and cons of such an endeavor:
The pros:
A stable, potentially rising stream of income
An activity to keep you busy in retirement
Potential additional tax advantages and deductions
Great diversification from stocks and bonds
The cons:
People rarely factor in all the costs such as insurance, taxes, maintenance, bad tenants, etc.
A large down payment or cash offer is often required to generate positive monthly cash flow.
Mortgage rates are high now compared to recent history, which makes positive cash flow a bit harder to achieve.
Potential liability from an unforeseen accident
Short-term rentals
There are a lot of great opportunities in the short-term rental space. This does bring on the added responsibility of marketing, generating positive reviews and buzz, as well as an increased need for maintenance and attentiveness. Like any small business where some extra work is required — if done well, it will pay off in the end. We have several clients who have had a lot of success with short-term rentals. There are even websites dedicated to helping you generate supplemental income from your properties. Read More…
