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Investing In Real Estate for Retirement Income


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. – PowerPoint PPT presentation

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Title: Investing In Real Estate for Retirement Income

Investing In Real Estate for Retirement Income
  • -By Ariah Rastegar

  • 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.

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
  • 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

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

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.)

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

  • 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.

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.

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
  • 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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