Where Should I Put my Retirement Money in Real Estate?
Planning ahead? Thinking about retiring? Looking for the best possible investment options for your retirement money? Think real estate! Whether your working days are all but over or you are planning for life after retirement well ahead of time, start thinking about ways you can use real estate to ensure a steady supply of income after you call it quits.
Sure, you can put all your hard-earned retirement assets through 401(k) or IRA into bonds and funds, but you will be neglecting the golden rule of utilizing the retirement funds, “diversification”. The Internal Revenue Service (IRS) allows the use of IRA and 401(k) money to be used for real estate investment. So, why not take advantage of the real estate market. If you are of two minds about putting retirement money in real estate, following considerations may help you great deal.
Make Use of the Deferred Taxes
The main reason investing your retirement money in real estate makes huge sense is the fact that all gains that you make from real estate business will be either tax-deferred or tax-free. Think about it. If you buy a property for $90,000 and sell it sometime later for $150,000, the $60,000 of income you generate will not be subjected to any kinds of taxes. I f you use your personal funds or any other source to buy a property, you will need to pay federal and state income tax on the profit you make.
Want to Flip It?
If you are interested in houses and know how to renovate, maintain, decorate and take care of houses, you may do well entering in flipping business. Anyone with keen eyes for locating properties with potential can make a fortune if he has the right financial backing. You yourself or with the help of a real estate expert/agent can buy properties in need of renovation at cheap prices, invest some time, money and effort into the property and sell it for substantial profit. Take advantage of tax deferrals on offer and get into flipping business.
Rent It!
One of the best uses of the retirement money is to invest it into buying rental properties. It guarantees a sure and steady income for years to come. If you are someone who knows the real estate market in your area well, you will not find it hard to find properties that make a good investment sense. Buying commercial rental properties with few needs of up gradation or renovation may be a great place to start. Taking care of rental properties can be a job in itself. If you are looking for something to do after you retirement, getting into rental market is the thing to do.
Keep a Steady Income Source
Whether you are into flipping or renting properties, you are securing a steady income source for you future. Of course, you need to do your homework before you enter real estate market, but if you are confident in your real estate credentials, there is no reason for you to be wary of putting your retirement money in real estate. Bold yet careful investment in properties allows you to generate substantial profits. These profits can help you start a dependable flipping business that can ensure a steady stream of income. Properties-to-let also promise a periodical money inflow.
Investing retirement money in real estate allows investors protection from inflation, investment diversification and ability to generate tax-deferred income. Just make sure all the renovations done on the property-to-flip are financed by the retirement money to enjoy tax deferrals. Buying houses, renovating them and selling them for profit, or, buying property and renting it out, both are great options to invest your retirement money.