- Take money out of your existing home:
- Downsize:
- Move to a smaller, cheaper home. Use equity left over.
- You can deduct $250,000 per person
- Also reduces your home expenses
- Equity Loan:
- Will boost your cash flow
- but could increase monthly mortgage payments
- Reverse Mortgage:
- Age 62 or older
- Proceeds taken as lump sum, credit line, monthly payment…
- No upfront payments to make
- Interest charges are added to loan
- Paid when home is sold
- Do not owe more than the sale of the house
- Other assets are protected
- But fees, interests etc. can drain equity for heirs
- Must pay off loan if borrower moves
- Eliminates downsizing option
- Downsize:
- REITS
- Publicly traded real estate investment trusts
- Own commercial, residential, or industrial property, or mortgage securities
- Pass through at least 90% to investors
- Income more on pass through rather than capital gains though it can also have capital gains…
- But moves with the real estate industry… timing is important…
- Diversified portfolio of properties
- Professionally managed
- Good for passive investors
- Good for short-term cash flow… not so for long-term gains
- Purchasing investment properties
- From renting out a bedroom in your home to buying multi-family or commercial properties…
- Borrow at least half of the cost of the rental property… at higher risk and profit
- Good properties earn at least 6 percent a year on the investment
- Set up a LLC with self-directed IRA with checkbook feature…
- Possibility of lots of work and having all eggs in the basket
- Join Crowdfunding Projects
- Groundfloor, RealtyShare
- Project based
- Investment firm vets and posts info but does not guarantee return
- Spread and minimize risk… lower threshold
- Often asked to commit money 5 years or longer
Source: 4 ways real estate can turbocharge your retirement income (CNBC)
Smart Realty & Investment Services 