This Real Estate Investing Strategy Could Add A Nice Boost To Your Retirement Portfolio

This Real Estate Investing Strategy Could Add A Nice Boost To Your Retirement Portfolio

Are you looking to make the most of your retirement money? With so many options available, it’s easy to get overwhelmed and feel lost when considering where best to invest. One potential solution people are turning to is rental homes as investment properties. The best part is, it can be completely passive. You can sit back, relax and let the rental income flow. You can invest in rental properties for retirement using a self-directed individual retirement account (IRA) making it an ideal choice for those looking to add some pizzazz to their retirement portfolio.Don’t miss:Rental Property Investment BenefitsInvesting in rental properties for retirement has several distinct benefits that can help provide security and stability during retirement.Steady IncomeOne of the main advantages is that rental property can provide a steady stream of income when other income sources become uncertain. This helps create a reliable source of funds to cover basic living costs and other important expenses.Long-Term EquityRental properties can also help build long-term equity, as monthly mortgage payments are eventually paid off. This allows retirees to take advantage of their investments by accruing more significant amounts of capital over time. This capital can be used to further support their retirement or be passed on to future generations.Hedge Against InflationInvesting in rental properties offers the opportunity to potentially increase returns over time through appreciation and inflation. As the value of the property increases over time, renters may decide to pay higher rents or even buy the property outright if it is up for sale. This provides an additional source of income for retirees and can lead to greater financial security in retirement. Because most mortgages are tax-deductible, investing in rental properties can offer tax advantages as well.Story continuesReal Estate Vs. Other Investment OptionsRental properties tend to have lower risk and higher returns than bonds and equities.Unlike bonds, which offer a fixed rate of return and carry little risk, rental properties offer the potential for both rental income and property appreciation. Rental income provides a stable and predictable cash flow, while property appreciation offers the potential for long-term capital gains.Compared to equities, rental properties offer a more stable and predictable return. While stocks are subject to market volatility and can experience significant swings in value, rental properties tend to be less volatile and provide a consistent cash flow.Source Of Passive IncomeRental properties provide an opportunity for passive income, allowing investors to earn money without having to actively manage their investments. Once a rental property is acquired, the investor can hire a property manager to handle day-to-day operations, such as finding tenants, collecting rent and handling maintenance and repairs.Purchasing With IRA FundsIt is possible to purchase a rental property with a self-directed IRA. This type of IRA allows the account owner to make their own investment decisions without the help of a custodian or broker. With this type of plan, an investor can use their IRA funds to purchase rental properties. Any real estate purchases must be for investment purposes. The rental income generated will be sheltered from tax and may also qualify for certain tax deductions. Any profits made from the sale of the rental property will remain tax-deferred until withdrawn from the IRA at retirement age.How It’s DoneTo invest in rental properties with a self-directed IRA, one must set up a special account known as an IRA LLC or checkbook IRA. Once the self-directed IRA and IRA LLC are set up, IRA funds can be used to purchase a rental property. The rental income generated by the property will flow back into your IRA tax-free, providing a steady stream of passive income for your retirement.A Hands-Off ApproachNot everyone wants to deal directly with tenants or property managers. Investing in rental properties through a fractional platform is a popular way to gain exposure to real estate without the hassle of owning and managing an entire property.Fractional InvestingWhen someone invests in a rental property through a fractional platform, they are purchasing fractional shares of the rental property. The investor owns a portion of the total property value, with other investors possessing the remaining shares. They’re also responsible for covering expenses like taxes, management fees and insurance premiums. This strategy enables investors to diversify their portfolios by investing minimal capital across various properties, lowering their risk and increasing their potential return on investment.Fractional real estate can be purchased through different means, such as a real estate investment trust (REIT), limited liability company (LLC) or crowdfunding platform.You can check out fractional real estate offerings with minimum investments as low as $10 on Benzinga’s Real Estate Investment Screener. These platforms provide access to a broad range of properties from various locations worldwide, allowing investors to make well-informed decisions on where to invest their money. Some platforms leverage advanced technologies like artificial intelligence and machine learning algorithms to analyze data and provide insights on potential investment opportunities for users.The Perks Without The HeadachesInvesting in rental properties using fractional investing with IRA funds can be a game-changer. It generates a steady stream of passive income and gives you the satisfaction of being a landlord without the headaches. Plus, owning a few rental properties sounds way cooler than just putting your money in a savings account. Start building your property empire today.Real estate investments provide a unique combination of stability, predictability and potential for high returns. While they may require a larger upfront investment and some degree of management, the potential for passive income and long-term gains makes them an attractive option for those looking to invest for retirement.Read next: Don’t miss real-time alerts on your stocks – join Benzinga Pro for free! Try the tool that will help you invest smarter, faster, and better.This article This Real Estate Investing Strategy Could Add A Nice Boost To Your Retirement Portfolio originally appeared on Benzinga.com.© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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