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So why dont more retirees invest in it as part of theirretirement planning?
Most retirees dont know all the ways to invest passively in real estate.
Consider these options and advantages ofinvesting in real estate for retirement income.
Theres nothing wrong with either strategy theyre classic methods for a reason.
But investors have plenty of hands-off options to invest in real estate.
The easiest and best known of these is buying shares inreal estate investment trusts, or REITs.
That means they dont providemuch diversification benefit.
Alternatively, consider passive real estate investments that arent publicly traded on stock exchanges.
More recently, you’ve got the option to also invest small amounts throughreal estate crowdfunding platforms.
To reduce the minimum, research passive real estate investment clubs.
Opportunity for Asymmetric Returns
Most real estate syndications target annualized returns in the 15-20% range.
Many private partnerships target similar returns.
Heres the kicker: The risk on these investments spans the entire spectrum.
Some come with high risk to match the high returns.
But many come withrelatively low risk.
The trick is to learn how to gauge risk when all of these investments promise high returns.
Ongoing Income
Manyreal estate investmentsgenerate income from Day 1 and never stop.
In fact, the income yield only goes up with time.
Many real estate syndications start paying monthly or quarterly distributions within the first quarter of buying the property.
And that says nothing of the propertys appreciation.
You could also invest in debt investments secured by real estate.
They often pay 8% to 12% interest immediately.
That income can help cover your living expenses in retirement, without you having to sell off any assets.
Diversification From Stocks
One of the reasons retirees like bonds is their lack of correlation with the stock market.
If the stock market crashes, they can still count on interest payments from bonds.
The same principle applies to real estate.Real estate incomekeeps flowing, no matter how the stock market gyrates.
That proves particularly helpful to avoidsequence of returns riskin the early years of your retirement.
Inflation Hedge
Real estate offers one of the best hedges against inflation.
When the value of a currency goes down, people simply pay more for properties.
People will always need housing.
Many businesses will always need restaurant space orindustrial space or storage space.
Rents dont just rise with inflation theyre one of the primary drivers of inflation.
And, of course, property values also tend to rise right alongside rents.
Tax Advantages
Real estate comes withfantastic tax benefits.
Those deductions pass through to you when you invest passively in real estate as well.
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