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The Benefits of Real Estate Investing for Retirement Planning

 

According to Statista, the real estate market is estimated to reach four hundred and ninety-eight trillion dollars in 2023. This goes on to show the rising demand for real estate and the growth of investors in this sector. Furthermore, many young professionals are planning retirement with their rental income.

If you want to invest in real estate in order to manage your finances post-retirement and enjoy a lavish lifestyle, then this article is for you. Dive in to understand how to go about tour investments and the advantages of investing in real estate.

 

Track Your Expenses Before Retirement

In order to understand how much money you will need every month after retirement, you need to know your current expenditure. Not everyone needs one million dollars a month, nor is it possible to run your household within a hundred dollars. Thus, before you do anything else, take out your bills and receipts and add up all your monthly expenses.

Once you know what and how much your expenses are, you need to take the time to calculate and come up with an amount after retirement. Keep inflation and taxes in mind while you do this. Thus, you need to earn this amount more or less from your rental income.

 

How To Have an Estimated Goal?

If you don’t know your monthly expenses or details of your expenditures, you can start tracking your expenses for the next six months. Take into account every penny that leaves your bank account. To make things easier, you can do the math on an Excel spreadsheet and divide your expenses into necessities and discretionaries.

Once you retire, your discretionaries will reduce as you would not want to take an expensive vacation to L. A or buy an Armani suit. So, you need to get enough income from your real estate to cover the non-negotiables like your household expenses, housing payments, groceries, and internet bills.

 

Start Saving for a Downpayment

Assuming that you’re starting from scratch with no savings to invest in real estate, you need to begin saving for the down payment of your future investment. Depending on how much you’re buying a property for, you need to save 10-20% of that amount for the down payment. Depending on your income, savings, and expenditure, it will take a while.

 

Top 6 Benefits of Real Estate Investing

Retirement can be scary for most people. There is no income for the coming years, and inflation, medical bills, taxes, and other household expenses consume savings. To combat the problem of financial insecurity, investing in real estate is beneficial. Read below to know how.

 

  • Earn Rental Income

The dreaded part of retirement is no active income for your monthly expenses. This will no longer be a problem if you invest in rental properties and commercial real estate. Both of these properties can give you an active source of income in the form of monthly rent coming from the tenants.

Real investing in real estate is a booming sector because today’s new-age working professionals and families do not believe in buying a property. Instead, they prefer staying in rented apartments and moving from one city to another. Of course, you may face a lean period between the gap of tenants leaving and new tenants shifting.

Additionally, there are other challenges like minor and major home maintenance costs, property taxes and so on. But if you successfully invest in a couple of rental units and commercial properties, the income will help cover most of your expenses.

 

  • Steady Appreciation of Your Property

The best part of investing in a good residential property or commercial property is that, with time, there will be appreciation. Simply put, the value of your property and the land on which it is built will keep increasing as years go by. Therefore, when you want to sell the property, you can get a good return on your investment.

 

  • Passive Income Source

As Robert Kiyosaki mentioned in his book Rich Dad Poor Dad, everyone should have enough passive income to become wealthy. A minimum of seven is what the author recommends. 

A passive income is an income stream that does not require you to work actively to generate money. Investing in a rental apartment will bring you income every month without you having to work for it or at least work hard for it day and night.

 

  • Beat Inflation by Investing in Real Estate

One of the major benefits of real estate is rental income, which helps you to combat inflation and manage your lifestyle. After your retirement, you will not have to worry about this trap. As the rate of inflation increases, so does your property value and rental income. Therefore, you will be able to retain your power of purchase.

 

  • More Control Than Other Investments

When it comes to investments like cryptocurrency, stocks, bonds, and mutual funds, they are beyond your control. All of these are risky investments with the control in the hands of the companies which are at the mercy of the market conditions. That is thankfully not the case with your real estate investments.

Despite the market situation, you can fully or partially control all your real estate investments. Of course, there are exceptions like an economic recession, global pandemic, natural disaster, and war.

You are in complete charge of your real estate investment decisions like when to buy, how much mortgage, interest rate, banks, and when to sell it off. Moreover, you can choose the location and the rent for your house.

 

  • Sense of Security

With real estate, your family and you can feel a sense of security and safety, as this is a tangible asset that is in your control. You can sell, lease, or transform it into a commercial unit. Either way, it will generate income and act as your financial net in times of emergency. Additionally, you can always pass off your properties to your children and secure their future as well.

 

Invest in Real Estate With Top Luxury Property

In today’s age, it is more than important to plan for your retirement so that you don’t end up bankrupt in old age. Everyone deserves a good retirement and a peaceful life after working so hard for all these years. Investing in real estate is key to unlocking a worry-free life and creating wealth for your family. Top Luxury Property offers you great investment opportunities in Dubai, where the real estate market has been booming for two to three years.

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