Should you invest in real estate? Actually, real estate investments can be a great addition to your retirement portfolio for a few reasons.
Should real estate be a part of your investment portfolio?
There are a couple of reasons why having real estate as part of your retirement portfolio is a good idea:
1. Diversification. When you are investing for something so far in the future, you’ll want a variety of items in your portfolio, including stock, bonds, and real estate.
2. Return on investment. When you calculate that you’re paying down the mortgage every month, appreciating rents, and tax breaks, your return could be well over 10%. Plus, once the house is paid off, you have a pure cash flow.
Of course, there are also a few reasons why it may not be a good idea for you to add real estate to your investment property. For one, real estate always comes with surprises. You never know when the air conditioner will go out or the roof will leak.
Plus, when you invest in real estate, you are working with people. If someone is down on their luck, your emotions may cloud your decision on whether or not to evict someone or rent to them.
Investing in real estate is a big commitment. If you get laid off from your job, you don’t have to put money into your 401(k). If you get laid off and your rental property is vacant, then you are in a bit of a crunch because you are still responsible for paying that mortgage.
If you do decide to invest in real estate, here are a few recommendations:
1. Start with an easy property. I will set you up with a property to make the whole process fun and enjoyable. Soon, you’ll want to buy more real estate!
2. Do your research. Make sure that you follow all of the rental licensing laws.
3. Be prepared to put 20% to 25% down. On a $300,000 house, that means you would need $60,000 to $80,000.
Ultimately, real estate can be a very rewarding investment. If you are interested in getting started with real estate investments, give us a call or send us an email. We would be happy to help you!