Our economy is booming: construction has plowed full steam ahead completing one project after another, cash is flowing, buyers are spending, jobs are available, and in theory we all have more money. But what usually happens when we have more money is we spend more. That’s when it is prudent to invest those extra pennies to ensure there is money later on, whether it’s for retirement or specific goals or dreams.
With the rise in the housing market and buying incentives for first timers, first-time home buyers are testing homeownership waters. They’re taking a step to invest in their future. But what if you already own your own home? How can real estate help your future?
One rule in the investment world is to diversify. “Don’t put all your eggs in one basket” – an old cliché that has stuck is still true. You have your 401K and IRA and you diversify within each of them to match your specific retirement needs. But another way, and often overlooked, is diversifying your retirement portfolio through real estate. Purchasing another house and renting it out is a sure way to set aside future equity, not only for the house but more importantly for your retirement. A future investment like real estate continues to give a return long after the mortgage is paid off. Renters increase the equity of the house for you, and once the house is paid off you have extra monthly income to spend, save, or invest. If you’re retired at that point then the renter’s check will help supplement your retirement budget, and with Social Security’s uncertain future it’s sensible to plan for its absence.
Median house prices are on the rise, almost back to the pre-recession average sale prices. Not to mention that there is upward movement as houses are appreciating. Purchasing an additional house as an investment is in your best interest before house prices continue to increase. The market is predicted to continue to do well as many sources predict the economy will continue its upward momentum.
Another option is to rent out your current home and purchase an upgraded home. With all the new construction around the valley and subdivisions expanding, maybe your current home doesn’t match your needs as it did in the past. Or maybe it’s just time for something different.
Investment options don’t have to stop at single family dwellings either– there are multi-family housing units available. From duplexes, 4-plexes, and apartments there is a wide array of multi-family units to fit your budget and commitment level. Commercial real estate is another lucrative investment as well. Business buildings usually have several spaces to lease. With the economy thriving and low risk levels, more entrepreneurs are stepping into the business world and they will need places to conduct their work.
There are various options for investing and the right option can be your solution to further diversifying your investment strategy.