Whether you’re just a few years away from your retirement or planning decades in advance, your retirement income is always an important consideration. Besides stocks and bonds, real estate can provide some great benefits to your retirement income.
Here are the most popular ways you can use real estate to boost your retirement fund:
1. Pull Equity Out of Your Home
If you are lucky enough to owe less money on your home than what the actual value of your home is, you can sell it and collect the difference. Then, you can put this extra money towards your retirement fund. If you downsize and move somewhere that has a lower cost of living, you will be able to save even more money for retirement.
2. Real Estate Investment Trusts (REITs)
REITs are “like mutual funds that own commercial, residential or industrial property, or mortgage securities, instead of stocks and bonds. They pass to investors rental income, gains from properties that are sold, or payments received on loans in mortgage-backed securities.”
These have the potential to yield capital gains and dividend income. They also pass about 90% of earnings to the shareholders, avoiding taxation at the corporate level. Additionally, REITs are relatively simple to buy and sell, since they are traded like stocks. This makes them more appealing than owning the investment property directly, but you won’t have as much control since they are professionally managed.
3. Direct Ownership of a Property
While owning and maintaining a property will require a significant amount of work on your part, you will at least have more control. You can choose the location and how you want to go about renting it out. Airbnb, for example, can allow you to rent out a single room or your whole house. On the other hand, you can just purchase an entire rental property. If you are able to secure a good property, you can end up earning about 6% annually on the investment.
A somewhat new tactic for boosting retirement income is through crowdfunding. Investors are given an opportunity to purchase shares in flipping homes or redesigning a business space through various crowdfunding platforms. You will be presented with various properties and their respected estimated income and capital gains. From there, you can select which one you want to purchase a share of, rather than finding the investment property by yourself.
Lakeside Title Is Here to Serve You!
Lakeside Title provides title insurance and numerous title-related services, all while making sure your transactions and funds are protected and secure. Our processes streamline residential and commercial real estate transactions for lenders, realtors, buyers and sellers. To learn more, give us a call at 410-992-1070. We look forward to the chance to serve you!