Why Real Estate Should be a Third Leg in Retirement Investing

Why Real Estate Should be a Third Leg in Retirement Investing

As a young professional, I realized retirement in today’s world required more financial planning and long term goals than our fathers before us. I looked at retirement as a three legged stool. Most people simply achieve two legs of their stool through social security and passive involvement in a work place sponsored 401K plan. I was no different until I turned to real estate investing as my “3rd leg”. I quickly watched as this leg became the concrete pillar of not only my retirement, but my financial freedom.

Today is the time to become a landlord. Today’s market features two unique conditions that has made renting properties now one of the most profitable times in our history. First, home ownership is at the lowest levels since 1965 (Bloomberg). The millennials have overwhelmingly chosen renting as their preferred housing accommodation. These two factors have been the catalyst behind record increases in rental prices. Rental rates are estimated to increase 8% nationally this year (Fortune.com). The demand for rental housing should remain strong and increase as the economy continues to create more jobs and as more millennials continue to become independent. Second, mortgage rates continue to hover near historic lows (currently around 4% for a 30 year fixed rate mortgage). Mortgage rates are benchmarked on treasury bills and treasury bills are based on the inflation within the economy. With inflation likely to remain stagnant, we can expect to enjoy these great borrowing conditions for some time.

Through calculated buying, smart leverage and common sense renting policy, you too will find success as a landlord.


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