Today, the median price for a single-family home is now 23% higher than it was in 2007, right before the financial crash. If the sound of that has you concerned, just remember that there are dozens of ways to invest in real estate without exposing yourself to direct, unnecessary risk. Real estate investments have always been a part of balanced portfolios, and right now, there are not too many options on the market that are generating the same kind of steady growth. Here are three real estate options to consider to boost your retirement income.
Buy and Rent a Home. Of course, this is the most straightforward way of investing in the real estate market, but it does come with its drawbacks. You’ll need to pay for all of the renovations to make a home attractive, and be on-call to handle leaky faucets as a landlord. The biggest advantages to being a landlord depend on what the housing market looks like around you: specifically, if rental rates are higher than mortgage payments. Many retirees just end up renting a given room or section of their houses, which keeps costs low and helps enforce their authority as the landlord.
Buy Into Publicly-Traded REITs. If you’re not willing to put the time into being a landlord, consider buying into a REIT, or Real Estate Investment Trust. These are companies that are publicly traded, and they’re so important that the S&P 500 added real estate as its 11th industry group this year. One of the big appeals of an REIT is that the companies are required to send 90% of their taxable income back to the investors. It’s required by the same law that gives these companies special tax breaks. As a result, you can potentially see much higher returns from trading REITs than you would on some other dividend stocks. Bear in mind that you can also invest in REITs through an ETF or exchange-traded fund, which will help keep the investment more diverse and secure.
Crowdfunding. If you’re not keen on playing the stocks either, then there’s still one more option for you in 2017 – you can invest in real estate through online crowdfunding. There are several companies, like DiversyFund and FundRise, which use the crowdfunding techniques of sites like Kickstarter to purchase real estate. That way, everyone who contributed to buying the house gets to share in the property’s success.
It’s important for you to diversify for today’s changing market landscape by taking more than just stocks and bonds into consideration. Ultimately, if you haven’t spoken with your financial advisor about real estate, and the ways in which you can use it to help boost your retirement income, then it may be time for a financial review. Click HERE to request yours at no cost and no obligation to learn about the different ways in which real estate could fit into your retirement strategy.