Why Invest in Real Estate?

There are a number of reports and studies circulating on the internet and in the media about Americans’ lack of retirement planning. A survey conducted by LIMRA, a financial services trade association, showed that approximately 49 percent of Americans say they aren’t contributing to any retirement plan.

While this trend isn’t exactly new, it’s still a concern considering that retiree health care costs have increased an average 6 percent a year since 2002, according to a study by Fidelity Investments.  Additionally, according to a new Gallup survey, Americans’ expected retirement age has increased from 60 to 67 over the last decade and a half.

Of those who are saving for retirement, the vast majority invest their money with banks, brokerage firms, mutual fund companies and insurance companies. The reality is that investing in real estate can give you a much greater return on investment (ROI) because it factors in a unique type of return: cash flow. Cash flow is an immediate return and adds significantly to a property’s overall ROI.

For example, the S&P 500 Index from 2000-2011 decreased 23.8 percent. If you were to invest $100,000 dollars in a rental property during the same time period, however, the cash flow you would receive (based on Census Bureau average rent prices) would provide an ROI of 101.8 percent.

Unfortunately, many people have shied away from investing in real estate because of the housing market’s activity in recent years. Savvy investors, however, have taken advantage of the new opportunities and continue to find great deals. Many have even invested their retirement funds in real estate and are slated for a secure, comfortable future, while building generational wealth. The little known self-directed IRA option allows for this, and as its name implies, allows the investor to direct his or her investment account activity—real estate included!

In times of increasing retirement living costs and widespread retirement planning oversight, it pays to research your options and take control of your finances—and secure your future.  Call me today - Frank


CNNMoney (http://money.cnn.com/2012/05/10/retirement/saving-retire/index.htm)
USA Today (http://www.usatoday.com/money/perfi/retirement/story/2012-05-09/rising-retirement-health-care-costs/54863320/1)
Gallup (http://www.gallup.com/poll/154178/expected-retirement-age.aspx)

USA Today (http://www.usatoday.com/money/perfi/retirement/story/2012-05-09/rising-retirement-health-care-costs/54863320/1)