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How To Structure Real Estate Investing for Retirement

With the massive swings in volatility associated with the stock market in recent years, many people look for different forms of investment in order to save for their retirement. Many people choose to invest in real estate primarily as the main vehicle for their retirement planning.

This creates several problems that need to be addressed that deal primarily with timing. Rental properties are great but unless you structure them correctly they may not throw off the right amount of income at the right time for you to take advantage of them when you retire and need the money to live off of. Of course, this could all be taken care of with a few careful steps that you can take and which I’m going to discuss in this article today.

The best forms of real estate investing from the point of view of retirement planning are called limited partnerships. These partnerships invest in a pool of shared appreciation mortgages or sometimes flat out pay all cash for income producing properties. Many partnerships include a combination of the two as well.

I find that these partnerships afford you the largest possible appreciation potential, the best tax gains, all at the lowest risk which is especially nice when you’re talking about investing in them for retirement plans. Because there’s one thing that we can all agree on and that is lowering risk is important for retirement planning. The closer you get towards your retirement, the safer you need your investments to be as I’m sure you are aware of.

There are seven or eight main criteria that most people will agree are the most important for investing with an eye towards retirement. They are…

Safety; will your money be returned to you without being diminished in any way? Income; retirement accounts are required to throw off cash. Growth; you want both the underlying assets to grow and the income that they throw off to grow over time to keep pace with inflation at the very least. Inflation; as I just referred to your retirement account must grow at least as high as inflation every year and hopefully more.

Liquidity; certain real estate investments are very illiquid so you are going to need to structure yours in a way that allows you to liquidate when necessary. Ease of administration; the last thing you want to do during your retirement years is get telephone calls at two in the morning to fix leaky plumbing. Professional management; ditto what I just mentioned about leaky plumbing.

Making sure that your real estate investment conforms to these seven or eight requirements is essential, so before you invest in any sort of real estate deal, go through the checklist I just gave you and ask yourself whether or not the investment fits those criteria. If so then you will have successfully structured your real estate investment for optimum retirement planning.

Written By Jason Markum

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