Having real estate as part of your retirement plan has plenty of advantages that compliment traditional retirement planning. Besides a steady stream of income, real estate can offer diversification and a hedge of protection during stock market volatility. Here are three forms of real estate to consider for your retirement income plan.
Farmland is one of our favorite forms of real estate for several reasons. Not only does farmland rental provide a wonderful stream of income, it's an appreciating asset that doesn't require much maintenance. One saying we use is "you don't have to replace the water heater on farmland". Also, especially in this part of the country, farmland rental is in high-demand. So, finding a renter is not usually a problem.
This could include either residential or commercial properties. Unlike farmland, rental properties do have water heaters and maintenance issues. However, we have seen many retirees enjoy "handyman" work to keep them busy and/or provide a sense of purpose. In other cases, retirees may want to travel more and have fewer ties to a rental property. So, in this case it might not be the best option unless a property manager is hired.
Real Estate Investment Trusts (REIT)
A REIT is a company that owns, and in most cases operates, income-producing real estate ranging from office and apartment buildings to warehouses, hospitals, shopping centers, hotels and farmland. Essentially, a REIT operates like a mutual fund for real estate. Adding a REIT to your portfolio can not only be an extra stream of income, it adds a large amount of diversification.
Do you own real estate or want to add real estate to your retirement plan? We'd be glad to help.
Please, give us a call at 320.222.4236 or email me at firstname.lastname@example.org.