Creating Passive Income and Investing in Real Estate is Crucial For Retirement

Investing in real estate is becoming an increasingly important source of income for those thinking about supplementing their incomes and retirements.

Experts in the financial space are increasingly putting an emphasis on income when it comes to saving and investing. The truth is that any lump sum can be burned through very quickly. While lots of zeros on your bank and investment statement can make you feel good for a few moments, it is the income potential and cash flow that has the power to keep providing and create a lifestyle of true freedom.

Bonds and CDs have been delivering horrible returns, and experts predict gold’s golden days are over too. Over the last several years some have stuck to stocks and REITs (Real Estate Investment Trusts) for their investments. Some have no idea what they are invested in; they just contribute to employer 401k plans or let an investment advisor just handle it. For them this is the solution to passive investing. They don’t have to think about it. They just do what they are recommended by those making money off of these plans, while clocking into the 9-5, hobbies, and trying to keep up with the Joneses.

Passive investing is great. It is an important tool for leveraging income generating products to make money while they sleep. Imagine spending more time doing what you love with the people you care about the most. However, it is also pretty clear that any responsibility or control over what individual’s investment dollars are being put in can almost invariably could be a recipe for disaster depending on the level of risk. This is probably more important right now than ever before. Whether you are 3 years, or 35 years from anticipated retirement you really don’t want to be wiped out, or have your money falling short of keeping up with inflation. Yet, that is exactly where many REITs and stocks are, and are headed. We are now in a rising interest rate environment. The only way for interest rates to go is up for the next 7 to 10 years until they break double digits again. That’s bad news for REITs. Then there is the size challenge. Even Warren Buffett has warned that his Berkshire Hathaway is going to struggle ahead due to its super-size (like many REITs, hedge funds, and private equity funds). On August 21st, 2015 the stock market lost $1.4 trillion dollars in a single day. That is retirement savings that may never be regained. Sadly it is also likely just the tip of the iceberg as analysts estimate the stock market has been at least 60% over valued. Oil has already taken a beating it may not bounce back from, and tech companies are expected to be the next to fall. All of the above turmoil is going to keep driving more individuals to invest in real estate to achieve the gains they need, and to prevent further losses. And real estate can offer a wide variety of advantages for passive investing.

For a start let’s consider the security, because that is what everyone needs right now. If your capital is evaporated you have nothing to invest. It doesn’t get much safer than real estate. Then there is the income you can generate from it. Buying rental properties and becoming a landlord is a great way to create and enjoy perpetual streams of income every month regardless of what the markets do. Values may fluctuate up and down over time, however the income will always come in if the tenant is apart of a government subsidized housing program.

Then there are two power perks many outsiders overlook. The first is taxes. Real estate investing offers plenty of tax breaks. By investing through a retirement account individuals can enjoy tax deferred or tax free returns and growth.

So before investing another dollar it is wise for every individual to take a look at what passive income real estate investment can offer.

I”ll See you at the closing table,

Marcel Umphery the “R.E.I. Successmaker”