8 Reasons Why Real Estate is Part of My Retirement Plan
As a self-employed Realtor, I don’t have a company 401k match or other benefits from an employer. I love working for myself and honestly wouldn’t have it any other way. But of course, I still have to plan for retirement. In 2017, I started investing in real estate in Atlanta to help me reach my retirement goals faster. It is a relatively safe and easy way to build wealth beginning with a small amount of money. If you are interested in investing in real estate, I’d be happy to help you find the right properties! There are really a lot of options and opportunities people don’t even consider.
Here are some of the ways investing in property can help you build an investment portfolio.
Real estate investments can provide you with a reliable and steady cash flow. Investing in rental properties is relatively easy as expenses are predictable and if your properties remain occupied you know what to expect in terms of profit margin.
Real estate appreciates in value. Real estate consistently appreciates, even during economic downturns, making it one of the more reliable investments. On average, real estate in the US appreciates between 3-5% annually. The Atlanta market
Real estate investments help you retire. If you have been paying on your mortgage throughout your working years, you will experience greater cash flow as you near the end of your mortgage term and the principal is paid off.
Real estate sales are taxed at a lower rate than other income. When you sell your property, you are taxed short- or long-term capital gains which are usually lower than income tax brackets.
Real estate equity can be leveraged. One of the most attractive reasons for investing in real estate is the ability to leverage your money. When you take out a mortgage to purchase property you reduce the amount of capital required. As you build up equity in the property, you borrow against the equity or refinance the original loan, freeing up cash to buy another property.
You have control to improve upon your asset. Unlike an investment in stock, where you have no control over how it performs, you can improve upon your real estate investment. Updating or upgrading systems, finishes, appliances, and landscaping helps build value in your investment.
Real estate gains taxes can be deferred. Under the 1031 exchange tax code, you can invest the gains from the sale in one property to the purchase of another property without paying taxes on the gains.
Real estate investments are depreciable. This is confusing, but you can legally claim a depreciation expense on an investment property even though the value of your investment property is actually appreciating. The depreciation deduction allows investors to generate a higher cash flow while reporting a lower income for tax purposes.
I know this is a lot of information! Here is my Guide for First Time Investors, if you’re interested to download it! It breaks down all this information into even more bite-sized chunks. And of course, I’m always here for questions!
