Retirement investing historically has been risky and uncertain. Investors are typically older, want to work less and still need income to live. One investment opportunity stands taller than the rest due to its consistency. Regardless of the shifts in the economic climate, it remains a viable investment plan. That investment is real estate.
Real estate investments are different because the investment is something tangible. People are always going to need a place to live, and unlike stocks and bonds, real estate can be liquidated quickly, and at a fair market value. Multifamily housing has the best income potential and is probably the most stable investment out there. The passive income from real estate accumulates as you sleep. If you get a property manager, there is even less work involved. Chances are good that you have heard of passive income. There is also a good chance you have heard horror stories about it. Real Estate has one thing over most other forms of passive income. Depreciation.
Depreciation means that there is a decrease in an asset’s value. The best example is a computer being outdated as soon as you buy it or a car losing a percent of its value when you drive off the lot in it. These are comparisons you have likely heard many times.
Depreciation is not something that is typically celebrated. Why should you be happy that what you purchased is now, in some sense useless or a waste of money? In real estate, it is a very good thing. Buildings may fall apart or take on damage. Every single appliance may simultaneously stop working and yet you have value in the one thing: Land. The land is a fixed cost. It never depreciates in value, and tax laws may allow you a deduction on the structural depreciation of any structure built on it.
With properties like apartment complexes, you can bring in even more passive income. The real estate investment itself appreciates and brings in more earnings to the property owner. Meanwhile, there are tax breaks for the depreciation of the structure and working features.
The lesson to be learned here is this: Purchasing real estate creates steady cash flow that you are not working yourself to the bone for. There are reduced taxes on that income as well. Depreciation is not a bad thing with real estate as you get a tax cut based on depreciation allowance. Meanwhile, your property value is actually always increasing. There is not a single investment that can do this other than real estate. The passive income is predictable even in the most turbulent financial times.
This option is the perfect investment your portfolio as you approach retirement. There are no brokers to pay, no annual fees, and it remains strong and steady. When you start thinking about your investment strategy, think real estate. It is a great way for you, the investor, to have security in retirement preparations.