Are You Investing in Real Estate for Retirement or Other Goals?

​Whether you’re preparing for retirement or looking to expand your financial portfolio, real estate investing is one of the best ways to build wealth. There are many ways to invest in real estate, including purchasing property for personal use and acquiring rental properties. Are you investing in real estate for retirement or other goals yet? If not, consider this information to determine whether it’s the right choice for you. Here, we provide insight into why it can be a good idea and steps for how to get started.

Key Takeaways:

• Investing in real estate can provide benefits such as extra cash flow and tax breaks and deductions.
• Defining your goals before investing in real estate can help you make the most lucrative choices that can contribute to your objectives effectively.
• You can balance your portfolio by allocating funds to various real estate investments, such as different types of property or property in new areas, so that a single part of your portfolio doesn’t hold the majority of your value.

​Why Invest in Real Estate?

There are many ways that real estate investing can benefit you and help you meet your financial goals. For example, one reason to navigate the real estate market is to take advantage of tax breaks and deductions when you purchase property. Many people benefit from tax deductions such as the cost of operating or maintaining a rental property, and you can also defer capital gains tax for buying real estate. 

Real estate investing can also fill the gaps in your portfolio by helping you consider what else you haven’t thought of that you may need, in terms of future financial support. For instance, if you’re preparing for retirement but haven’t thought about where you’ll live or how you’ll support yourself, you can make these plans using real estate investments. This is because real estate can offer extra cash flow, especially if you manage a rental property.

How To Use Real Estate Investing To Meet Your Goals

Here are a few steps you can take to invest in real estate to work toward your retirement or other financial goals:

Define Your Goal

The first step you can take toward investing in real estate is defining the goal you want to achieve with your investment. For example, you may want to build your retirement savings, diversify your financial portfolio, or secure a permanent home for yourself and your family. Whether your goals are personal or business-related, clearly defining your objectives can help guide your process later. When outlining your goals, be as specific as possible, and make note of how real estate investing can contribute directly to your plans.

For example, if your goal is to build your retirement savings, outline which types of real estate investments can help you do so. This can mean deciding between purchasing a property for personal use or for rental purposes and choosing a location where properties typically hold value well.

Assess Your Risk Tolerance

Consider your tolerance for risk before you invest in a property. Some real estate investments, such as rental properties, can experience costs after the initial purchase that take away from your return on investment. Other risks that you can experience when investing in real estate include dangerous locations, negative cash flow from vacancies or damages, and tenants who disrespect your property.

To consider how much risk you can take on, think about your financial goals and the maximum costs you can incur safely over the next few years. Create a budget that factors in surprise costs, such as repairs and raised taxes, and identify a price point that fits into it. You can also complete a thorough inspection of a property before finalizing your purchase, as this can help you prepare for future repair costs and identify structural problems that may not have been obvious from the listing, such as weakened foundations or mold.

Set a Time Horizon

A time horizon refers to the length of time that you’re willing to wait after your initial purchase before you see a return on your investment. For some investors, this can be a medium period of 10 to 20 years, especially for investments that take time to offer returns, such as real estate. A long time horizon can be anything more than 20 years, which means you can wait longer to get the money back that you initially invested.

This is a crucial element to consider when investing in real estate, as some types of properties won’t see a quick return on investment. Many properties, such as single-family homes, maintain their value well but won’t bring in cash until you decide to resell them later. If you think your time horizon needs to be shorter to meet your financial goals, you may consider investing in a rental property with monthly cash flow. This can allow you to minimize your time horizon.

Do Your Research

Once you have an idea of your desired timeline, you can start researching the types of real estate investments that may be best for you. First, choose a region, city, or neighborhood where you want to live or own property. You can often find information about different areas online. Then, compare the costs of purchasing real estate in all the areas you’re interested in to identify where the most lucrative investments may be. It’s also advisable to visit the neighborhood in person, as you can then learn about its amenities and property sizes.

When you know where you want to buy property, you can then research the types of property you may buy. For example, one way to invest in real estate is to buy a mobile or manufactured home. This is because the maintenance and upfront costs for these types of homes are often far lower than those of a single-family home. You can also end up paying less money for the land than with a traditional house, while the homes themselves still offer comfortable living spaces. 

Mobile and manufactured homes can provide multiple options for investments as well, as you can purchase a mobile home or a plot of land where someone can bring a mobile home. You can also opt to invest in a mobile home park and allow people to pay to keep their own mobile homes in your park.

Start Investing

After you’ve considered all the costs you may incur, the timeline for your desired return on investment, and the type of property you want to purchase, you can begin investing in real estate. Look for investment opportunities online or in your local area, then reach out about any properties that interest you to ask any questions you may have.

Many people find it beneficial to work with a real estate agent when finding investment properties, as realtors often have inside access to properties that may not be advertised on the public market. If you find a real estate agent you want to work with, share your goals and time horizon with them and ask them about properties that fit all your specifications. A real estate agent can also help you negotiate pricing with the seller, which can ensure you get the best deal possible on your initial investment.

Rebalance Your Portfolio Regularly

When you feel confident in your real estate investments, it’s beneficial to regularly rebalance your portfolio. This means allocating funds to different types of investments to ensure no one part of your portfolio holds the most value. In terms of real estate investing, this may mean using money from one property, such as a single-family home that you rent out, to invest in a different type of property, such as a multifamily home.

Another way to rebalance your real estate investment portfolio is to purchase properties in different cities and states. This can diversify your portfolio by geographic location, giving you extra support should the market crash drastically in one area.

Learn More About Real Estate Investing

If you’re ready to start investing in real estate and need some help getting started, consider our free or paid membership. With this membership, you’ll get exclusive access to advice from financial advisors, admission to strategy and training sessions, and special deals that you can take advantage of to build your portfolio with ease.

These are just a few ways you can start investing in real estate for your retirement or other financial goals. By taking the leap and purchasing a piece of property, either to rent out or to sell later, you can diversify your current portfolio and give yourself some extra cash flow to look forward to. When investing in real estate, a careful plan and comprehensive budget can make all the difference in helping you reach your goals.