Are you looking for ways to retire early or simply looking for the perfect retirement plan? Many people enter the real estate investing business for the sole purpose of making money. However, other property investors view real estate investing as a secure retirement option. Here are some of the benefits of using real estate investing as a retirement plan.
Passive Income/ Cash Flow
The first and most obvious answer to why real estate is a good investment for retirement is that property investors receive passive income in the form of monthly rent which they collect from tenants. This steady rental income is a real estate investor’s best friend when it comes to retirement plans. Not only does it help in paying mortgage payment and in becoming debt-free, but it also makes retired earning much more lucrative.
If a real estate investor makes smart investment decisions, he/she can live on this rental income and retire completely. Positive cash flow is your best friend when it comes to early retirement planning. It helps real estate investors become debt free and provides high rental income for real estate investors. So, if you begin early with your real estate investments, it will be easier to retire and live off your real estate investment income.
By the time they retire, property investors will have paid off their mortgage, and they’ll start getting the rewards they’ve been waiting for. They can choose to further continue renting out their investment property and make a stream of income, sell the rental property for a profit, or just live in it.
Making money in real estate investing is great, but what’s even better is receiving tax deductions. By owning rental properties, real estate investors become qualified for different tax deductions on several expenses associated with the rental property and its functions, such as depreciation and insurance. For example, the rental income which the rental property generates is tax-free. Also, the investment property taxes, operation expenses, and insurance are all tax deductible as well. These tax deductions will definitely have a positive impact on a real estate investor’s wealth, whether it’s for career purposes or early retirement.
Real Estate Appreciation and Equity
Equity and appreciation are long-term advantages of real estate investing. Both deal with an increase in value but in different ways. Real estate appreciation is an increase in the fair market value (FMV) of a real estate investment property over time. Equity is an increase in a real estate property’s FMV due to mortgage payments (which, naturally, factors in time). These increases in value are perfect for retirement planning for real estate investors. If you begin early and buy a real estate investment property in your 20’s or 30’s, with an increase in value you can sell the investment property later on for double its original cost – or even more!
Leverage To Create Wealth
Another way real estate is a good investment for retirement is that it gives property investors the leverage to build their portfolio of investment properties. When a real estate investor takes a mortgage to finance buying the investment property, he/she will have the ability to invest in other investment properties with less money down. When financing the rental property in this way, a smart real estate investor will pay off the mortgage and save the rest of his rental income as a down payment to buy another investment property! Repeating this process to buy and own multiple investment properties will lead to increasing the real estate investor’s rental income, which pays the mortgage, taxes, maintenance, management, etc. By the time they retire, they’ll have enough money saved and a steady source of passive income to make them set for life.
Many agree that real estate investing is one of the best ways to create and grow wealth. If you put effort and careful planning into it, real estate investing will guarantee you a secure and fast retirement. For many people in their 20’s and 30’s, retirement may seem like a distant concept – something that you don’t have to think about every day. But if you’re smart and extremely hard-working, retirement doesn’t have to happen in your 60’s; with real estate investments, you can go from no plan to retired in a few years.
If you like the idea of early retirement through real estate investing, speak with a hybrid agent from Lionsgate Real Estate Group today. They can help you find the perfect investment property and also handle your mortgage needs.