Real Estate is the best retirement plan you can make for yourself or your parents. Owning a property can never really go wrong as long as you follow the right process and work with the right realtor. Buying a property and renting it out can help you accumulate huge savings, and you can use these savings as part of your retirement plan. You can also decide to live on the residential property when you retire or sell it for a higher price.
Since Real Estate holdings continually increase in value, whether now or in the future, becoming a real estate investor might help you generate adequate income for your retirement plan.
Many people believe real estate investing to be superior to stock investing because it is not only one of the oldest types of investment but also gives more stability.
You can expect seeing your money increase steadily over time if you continue to invest in real estate.
Real estate investing as a retirement plan: is it a wise decision? The answer is yes, and many people have achieved this goal to ensure a comfortable lifestyle.
But there are no guarantees in life, and some unfortunate people find themselves without a shirt and everything else as well. In order to succeed in real estate investing, one must possess a certain level of knowledge and guts. It is possible to make a great investment in real estate if you do it right.
Here are some tips for retiring with property.
There are many ways to invest in real estate, including buying properties that generate income and flipping properties. Remember that you have recordkeeping and tax responsibilities when you invest in real estate.
Owning your own home
For some retirees, owning a home is not only for financial benefit but more like leaving an inheritance for their children. Nevertheless, if you are at least 62 years old and own equity in a home, you can obtain a reverse mortgage, which enables you to borrow money against your house and avoid making payments as long as you live in it.
Homeownership can also shield you against the stress of having to pay house rent after retirement. And also provide you with a second source of income.
Real Estate Investment Trusts (REITs)
A real estate investment trust is a company that owns, finances, and operates real estate.
It distributes at least 90% of the profits in the form of dividends. The dividends paid out can provide retirees with a meaningful source of income.
With this company, retirees can enjoy the advantages of real estate without the headache of purchasing, financing, and operating property. One disadvantage for REIT investors is that they have limited control over the success of their investments.
If investors don’t like the income, their only choice is to sell their shares. But some private REIT businesses restrict share sales to certain periods of time. By investing in real estate rather than just one or a few, you may diversify your investments and lower your risk.
Flipping or wholesale real estate
When you buy an old or outdated house with the purpose of renovating and reselling it for a higher profit than using it yourself it is known as “flipping” or “wholesale” real estate. Flipping houses looks easy, but one of the mistakes people make is underestimating the money needed to flip real estate. As a wholesaler, you don’t need a license to go into this business; you just need to buy at a lower price and sell at a higher price.
Flipping houses can definitely be a lucrative business. It can also be a great way to lose money, especially if you lack the necessary resources, abilities, and knowledge. To successfully flip houses, you need real estate knowledge, home improvement abilities, and access to cash.
One of the rules of flipping houses is the 70% rule. This states that a wholesaler should not pay more than 70% of a property’s after-repair value (ARV), which is determined after subtracting the cost of any renovations that must be made to the house. That is, if a property can be resold for 10 million naira, you should not pay more than 7 million naira for it.
The 70% rule of house flipping calculation is as follows:
If the after-repair value [ARV] is 150 million [150,000,000],
And the cost of repair is $25 million [$25,000,000].
A wholesaler should not pay more than 80 million [80,000,000].
The 70% rule house flipping calculator is 150,000,000 x 0.70= 105,000,000 – 25,000,000 = 80,000,000.
Renting out a residential property
Rental properties are properties leased or occupied by a tenant for which rent is paid to a landlord. Residential property like single-family homes, condominium units, apartments, townhouses, duplexes, and so on gives you the chance to earn above-average returns on your investment.
Renting out a residential property can be significantly better for retirees than investing in the stock market, and it generates cash flow in the form of monthly rent. Furthermore, you must consider the property’s present and future values before buying a house as part of your retirement plan. Problems like market conditions, inflation, or a population issue can cause significant loss if the retirement home is acquired in the wrong location.
Own and rent out a commercial property.
Investing in commercial property provides a steady income during retirement and can be a desirable investment since it provides expansion possibilities. Banks and other financial institutions view retirees as excellent candidates for loans because they can provide appealing interest rates and innovative financing solutions. Rent payments can aid in property repayment. Investors can also use the property as collateral for loans to buy more properties that generate profit.
A shop is one of the most common commercial properties, and choosing a location with a high population will help you earn better returns. Those who rent your shop will have more customers and earn more money when the population is high. This is advantageous to landlords because the greater the population, the higher the rent, and the greater the property appreciation.
If you are looking for the best location to own a commercial property, check out Buildzone Housing Solutions’ Patiosa Plaza. It consists of shops for several business purposes. Like the Cutonuo Market, this plaza will attract lots of population in the near future and generate high income for both landlord and shopkeeper.
Own a commercial property and run a business from it.
You could have believed that a single person owned major shopping centers, industrial parks, and other properties, but that is not the case. Several persons can own smaller parcels of land, and commercial premises can be divided into smaller owner-occupied flats.
Just like BuildZone Housing Solutions’ Patiosa Plaza, which consists of 30 shops, investors don’t need to buy all 30 shops. You can own one shop for the purpose of running your own business. Another one for the purpose of renting it out for more profit.
In this case, retirees will have more hedges to make money through diversified methods.
Purchase and rent out a vacation home on a part-time basis.
Owning a vacation home as a retirement plan is more profitable when renting it out for a shorter period of time. If you have the right house in a popular location, you might be able to earn as much money from a few vacation tenants as you could from a year-round tenant in some locations.
Additionally, you can also spend some time there yourself. Your second house might leave your heirs with a legacy. Family vacation houses can be wonderful settings for establishing traditions and memories for the next generation. Your children might be interested in buying and maintaining the house in the future if they can imagine themselves living there after you pass away.
One of the best places to own a second home is Carson Court. A mini estate in Benin City fit for young families and commercial investors. This estate is of high value and is located in an area where most foreign and Nigerian businessmen spend the majority of their budget on real estate. Owning a home in Carson Court is commodious and could boost your monthly income and long-term wealth.
Buy and rent a multi-family home.
Multifamily real estate is an incredible opportunity for both novice and experienced investors. These transactions can help you expand your portfolio quickly, generate more cash flow, and lower your risk of vacancy. Additionally, you’ll be able to profit from some excellent tax advantages.
Although investing in multifamily homes (and their numerous rental units) frequently requires more effort, money, and overhead. It can also increase your monthly revenue. But you don’t have to be the one to manage the property if you don’t want to.
A technique for supporting a project or business venture by soliciting contributions from many individuals is Crowdfunding. Which is a type of alternative finance.
The concept is that numerous people each contribute a tiny sum to a certain project. The idea of investing in real estate through crowdfunding is growing in popularity and becoming more affordable. Real estate investing now has a whole new avenue thanks to crowdfunding.
Equity crowdfunding and real estate crowdfunding are extremely similar since they both allow investors to purchase shares of a property. The entire property does not have to be purchased by the investor. As an alternative, the investor may receive a share of the profits made from the real estate investment. For example, the landlord will receive any rental income or sales proceeds from the building.
Here are a few real estate crowdfunding sites: Realty Mogul, FundRise, GroundFloor
The easiest method to figure out which form of investment business would work best is to do research on each one before making any judgments. Real Estate may be your greatest option if you’re looking to work on your retirement plan. Nevertheless, there are other investments you may make to help you reach your objectives.
Get in touch with us, if you have any questions regarding where to invest in real estate. We’ll be happy to help.