Real Estate Investing for Seniors

If you are like me, you didn’t expect to be where you are today, rapidly approaching retirement without a pension or comfortable nest egg. Your 401(k) or IRA isn’t earning what you thought it would, and even though you qualify for Social Security, you realize it might not be around (and the amount will almost certainly not be enough for most people to survive on). We’re not alone.

According to the most recent poverty report released by the United States Census Bureau, one out of six senior Americans lives below the poverty line set by the federal government. To make matters even worse, without their Social Security income, more than half of America’s seniors would be living in poverty.

The National Council on Aging paints an equally bleak picture. Citing information from the Institute on Assets and Social Policy, the NCOA reports that one-third of senior households either goes into to debt to meet their needs each month or has no money left over at the end the month.

My story and the answer

That was what I was facing when I returned recently to the United States after spending 11 years in Haiti working with orphans and abandoned and at-risk children. Although we loved the work, my wife and I wanted to spend more time with our seven children, four grandchildren, and her aging parents. I didn’t have pension or retirement accounts, so I needed to either continue working or find another way to fund my retirement.

I chose the second option. Like many seniors, the answer for me was real estate, and it could be the answer for you, too.

Over the next six years, I’ve set the goal to grow my real estate investments to 1,000 units (or doors). Those units will be a combination of single family residences and multifamily housing such as duplexes and apartment buildings. As I invest, I’ll document my progress on this blog and through my podcasts, and I’ll share tips and insights along the way.

Real estate investing that is right for seniors

There are a lot of different ways to invest in real estate. You can fix and flip properties; wholesale them (purchase properties at a discount and sell them to other investors); invest in deeds, trusts, or liens; and even become a hard money lender who makes short-term loans to help other investors close deals.

For most seniors, though, I think the best approach is to purchase rental properties or partner with other investors and sponsors in apartment buildings. Here’s why:

• It’s a relatively safe investment. The market can go down but almost always rebounds, and unlike stocks, you own a tangible asset, the land.

• You already know the basics. If you’ve purchased your own home, you have a basic understanding of how real estate works.

• Upfront costs can be minimal. You can invest in a REIT or use funds already in a self-directed IRA to purchase rental properties.

• Income is steady. With a rental property, you get paid regularly from the start and on a regular basis. Plus, you benefit from tax advantages at tax time and equity when you sell.

• You can invest from home. You can set your own hours and work as much or as little as you want.

Is real estate right for you?

Real estate isn’t for everybody, but if you are facing retirement or have already retired but don’t have enough income, real estate is one of the quickest and best ways to generate wealth. Historically, most real estate returns range from 5 percent to 21 percent, but the percentage can be even higher depending on how long you hold the property.

Ask yourself:

• Do you feel your retirement savings or income is inadequate?

• Have you seen your pension cut or eliminated?

• Are your retirement accounts/funds generating insufficient income for you to live comfortably?

• Has the fluctuating stock market caused your retirement savings to decline in recent years?

If you answered yes to any of those questions, like I did, it may be time to consider real estate. Investing in real estate gives you the opportunity to control your financial future and create the retirement you want.