Retirement is a wonderful milestone, but it may also be frightening. Seniors who plan to retire from work are usually confined to a fixed income. It consists mostly of Social Security benefits, withdrawals from savings, and, in the best-case scenario, a pension. However, even those sources of income aren’t often sufficient to achieve financial stability and sustain a respectable level of living later in life. That is why seniors should consider real estate investing as an additional source of income. There are 3 ways real estate can help you make more money in retirement.
It is a good idea to consider how real estate might help you enhance your cash flow as a senior. Here are the 3 ways real estate can help you make more money in retirement;
1. Income generation from REITs
REITs (short for real estate investment trusts) are similar to mutual funds. They invest in corporations that own and invest in properties rather than equities or bonds. Some REITs specialize in residential assets. On the other hand, others concentrate on commercial properties such as shopping malls, office buildings, and hotels.
Purchasing REITs has the advantage of allowing you to participate in real estate without having to acquire a second house or a structure. REITs, like stocks, pay dividends, which can provide a steady stream of income during retirement. In this manner, it can help you make more money during your retirement.
2. Earning revenue from rent
People will always need a place to reside. If you provide one, you may be able to receive monthly rent payments. This will supplement your retirement income on a regular basis. When it comes to producing rental revenue, you have a few options. First, if your home is fit for this type of arrangement, you could rent out a section of it. If you have a finished basement or a converted garage, for example, hosting a tenant may be a viable option. Your house may be paid off by the time you retire, as many seniors do. You can use that money to pay your property taxes and maintenance.
Another alternative is to purchase and rent out an investment property. This is riskier than renting out a portion of your primary residence. It is because you’ll be taking on the hazards of owning a separate property (think expensive repairs), but the positive is that you won’t have to deal with a renter living in your home. You can also sidestep the difficulties of being a landlord by outsourcing maintenance and rent collecting to a property manager.
3. Home Equity
Sometimes, your primary residence isn’t totally paid off by the time you retire, there’s a high chance you’ll still have a significant amount of equity in it. That means you can borrow against it if you need extra cash, whether through a home equity loan or a line of credit.
Of course, there’s another way to profit from your home’s equity. You can sell it and pocket the proceeds. Sometimes, you find you don’t require as much space as you once did. On the other hand, you may be willing to relocate to a different area or city with reduced housing rates. This option can be the best for you to take.
As much as you may plan for retirement, it is possible that it will be more costly than you planned. Rising healthcare expenditures, as well as other unexpected expenses, can throw your financial plans off track. Consider using real estate in your retirement plan. This is if you want to ensure that you have a steady stream of income in retirement. This can help you to make more money in your retirement life.