Investing In Real Estate for Retirement Income

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Investing In Real Estate for Retirement Income

• -By Ariah Rastegar

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• Is real estate a good way to generate strong
  returns for retirement? Absolutely. Having a
  reasonably steady, and a mostly predictable,
  income stream is the Holy Grail for retirees.
  This is why investors love real estate.
• Youve heard it time and time again Cash Is
  King. Its most certainly a cliché, but its
  resonance becomes reality with real estate,
  particularly with this simple modification Cash
  In Hand Is King.

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Heres Why

• Protecting Your Principal
• One of the most important goals for generating
  retirement income is lowering risk while
  protecting your invested capital. This is called
  principal protection. Companies that produce
  consistently high and growing levels of free cash
  flow for investors (who realize income on a
  quarterly or monthly basis) are much less likely
  to go bankrupt and take all of your money with
  them.
• While cash flow is not the end-all-be-all to
  flawless investing, the greatest investors in the
  world candidly agree that there are times when
  they will be wrong, so they must plan for that
  possibility. Cash is that backstop.
• Real estate opportunities offering current cash
  on cash returns (a metric used to describe the
  return you are generating on your initial capital
  contribution annually) should have enough cash to
  pay timely distributions and to pay all the
  expenses of operating and growing the bottom
  line.

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Rental Income

• -say, from an office, retail, or multifamily
  property is one of the best sources of passive
  income (called that when youre not actively
  managing a property someone else is) and its
  rivaled by strategically investing for dividends.
• The theory is simple the property owner
  diligently sifts through applicants to find great
  tenants, and as a result, the investor can more
  often than not expect to receive current
  payments.

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Buildings Make Sense

• No one really knows for certain what actually
  drives a stock price up or down. But investing in
  real estate provides a greater degree of control
  over potential appreciation because there are
  things the owner can do to boost a propertys
  value and its income.
• A good real estate investment starts with these
  qualities a solid structure, an advantageous
  location, creditworthy tenants, ordinary (not
  excessive) repairs, annual or scheduled rental
  rate hikes and the ability to pay the mortgage
  every month.
• There are various ways to invest in real estate.
  My personal preference private placements, which
  are offerings that accredited investors can
  participate in through investment firms. (The
  Securities and Exchange Commission defines an
  accredited investor as someone who is financially
  sophisticated typically with earned income over
  200,000 or 300,000 jointly or a net worth over
  1M alone or with a spouse, excluding the value
  of a primary residence.)

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Work With an Adviser

• In order to invest in real estate for retirement
  with the least risk and the potential to generate
  the highest returns, you must tap into
  specialized knowledge and skill. I believe for
  the novice accredited investor, the best way to
  do this is to speak with a Registered Investment
  Adviser (RIA) with experience investing in real
  estate.

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• An RIA is a fiduciary for you, doesnt take an
  upfront fee and is dedicated to guiding you
  through the jungle of real estate options, which
  include private placements, private real estate
  investment trusts (REITs), limited partnerships
  and other securities. Each of these comes with
  its own set risks and rewards, as well as terms
  for participation, such as the required minimum
  investment or the duration of the investment.
• Dont be afraid to tell your RIA what you want to
  get out of a real estate investment. Outlining
  your goals will help put you on the path to
  identify the best strategy for your retirement.
• For instance, you could ask your RIA Can I
  still get to an 8 return per year on my money
  after fees? The answer is yes. Currently, real
  estate investments in emerging, secondary, or
  tertiary markets (think of areas like San Marcos,
  Texas or Columbus, Ohio), can provide an 8
  return if done correctly.

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Heres another tip

• If you have personal access to the actual
  owner/operator or the professional investment
  manager of a property, you will put yourself in a
  position to potentially get superior returns
  after fees.

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Talk Taxes, Too

• In my experience, strategic tax planning is one
  of the most overlooked topics for investors new
  to the real estate landscape. So be sure to
  consult with your CPA to discuss the various tax
  benefits specifically suited for retirement.
• Talk about things like whether to invest through
  your IRA and how depreciation can help you keep
  more of the rental income you collect after
  taxes.
• Key discussions with an investment adviser and a
  tax adviser can go a long way toward finding the
  most appropriate real estate investments for the
  retirement income you desire.

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Thanks!!!

• Source http//www.forbes.com/sites/nextavenue/201
  5/11/04/investing-in-real-estate-for-retirement-in
  come/