Real Estate Retirement Plan
When the time comes to create and execute on a retirement plan, many may look to their parents as a model of retirement investing and wonder how they could ever follow in their footsteps. However, the way our parents did things may not always align with the best option for our individual needs and fit inside each of our own circumstances.
Take my parents, for example. My parents developed their wealth over many years. They saved some but mostly played in the “single-family home rental game”. This all started when I was in 6th grade. A family friend told my parents they were thinking of selling their home and my dad said, “I’ll buy it from you.” And just like that, my dad owned two houses and turned one into a rental property, and became a landlord. He built his rental portfolio by being very opportunistic buying from friends and neighbors who mentioned the possibility of selling. Over time, he has paid off his rentals.
Present day, he owns several homes and enjoys the benefits that debt-free real estate investing offers. From day one, his purpose for buying rentals was to create passive income after retirement. My dad loves being a landlord and working to retire with real estate investing.
I’ve come to realize that being a residential landlord is not the right path for everyone. Landlording, or dealing with a property manager, requires time and energy and doesn’t always fit into an investor’s day, and often can result in frustration and poor quality service to the tenant. Because of this, many look to debt-free real estate investing as an alternative to owning residential rentals and a way of laying a strong foundation for a productive portfolio.
Debt-free Investing Benefits
There is a way to create the real estate investment retirement plan you have always wanted without the inconvenience and hassles of dealing with tenants, trash, and toilets. The key is to learn how to start investing in real estate debt-free. Here are my top 3 benefits for diving in and doing all-cash real estate investing:
- Benefit 1: Risk is mitigated and brings clarity to other areas of life. Debt-free assets will never experience bank foreclosures. There is serenity in knowing that.
- Benefit 2: The passive monthly cash flow from a debt-free investment can be used for building your wealth or paying for your toys (once the toy is paid off, that money keeps coming in).
- Benefit 3: A debt-free investment in a tenant in common offering like those at Millcreek Commercial allows for both portfolio diversification and an increase in asset quality.
- Portfolio diversification can be achieved by spreading an intended amount across more than one building/tenant/stateline.
- An increase in asset quality comes from buying a portion of a high-quality building on a busy corner, like a Family Dollar. Such assets may be better for long-term portfolio play than owning all of a residential rental with lower quality real estate fundamentals, like a duplex.
Something done today will pay off time and time again. If you have been wondering how to start investing in real estate debt free, then let’s schedule a call. A bit of education could help set your bearings for your future retirement plans and provide the design needed to make the needed decision today.
Millcreek Commercial offers debt-free tenant in common (TICs) interests in high-quality commercial assets with long-term, single-tenant leased properties with strong corporate guarantees and net leases (NNN).