For most people, real estate and retirement investing do not go hand-in-hand. That’s mainly due to a consensus that real estate doesn’t present the kind of low-risk strategy many people prefer when planning for their later years. However, with the housing market seemingly in full recovery and the overall economy finding better footing of late, it might be worthwhile for people approaching retirement–or who are looking to make long-term plans for when they are ready to stop working–to re-evaluate that stance.
Real estate investment tools
There are a number of ways to use real estate as a retirement investment, from buying cheap, bank owned homes and renovating them for use as a residential multi family property, to purchasing larger commercial real estate. There are also investment instruments like real estate exchange traded funds and real estate investment trusts.
The first option is to buy one or more properties to turn into rentals. This is the more time-consuming method, but it can also provide the most satisfaction because of the work that goes into it and the reward you reap for that effort. And for retirement purposes, it can provide idle hands with something to do once you’re no longer in the workforce.
Finding the kinds of properties that would work for that strategy is pretty easy. Property auctions and foreclosure auctions are held regularly, and they offer the opportunity to find great deals on distressed or fixer-upper homes. One of the best ways to explore that option is through Auction.com, which has listings in every part of the United States, making it easy for the residential investor to find what they’re looking for.
Another way to use real estate for retirement investing is by getting involved with ETFs and REITs. Those provide a more passive investment, where you simply invest your money and the companies or traders own and manage the properties. The return might be lower than if you did the work yourself, but REITs offer a lower risk, lower pressure way of getting into the real estate market.
Making an investment decision
Preparing for retirement is a decades-long process, and there are a number of different ways to go about it. For someone who likes the idea of adding a little sweat equity to their investing, buying rental properties is an excellent way to build a nest egg while putting in the extra work that can make realizing a return on investment all the more enjoyable.
