The Overlord-Underlord Move
The average return on rental properties is 15%, almost double the average stock market return. Thirty-five percent of U.S. households rent their homes. Vacancy rates are at a 30-year low, rents have gone up for 29 consecutive quarters, and high-income households have driven more than 75% of the renter growth, according to a Harvard study.
In short, it’s a great time to truly diversify your portfolio with a foray into the ways of the Overlords – investment property ownership.
It’s not an either-or proposition, with real estate investing pitted against the S&P. Real estate investment is a great tool that can bring balance to your asset portfolio, with several benefits not enjoyed in the stock market. Our team takes the 30,000-foot view of wealth mastery, and helps develop tangible strategies to achieve it.
Benefits include the ability to finance your investment at extremely low rates, garnering you an appreciating asset as security, plus opportunities for tax-efficiency. The burgeoning rental market (thank you, millennials and boomers!) is the icing on the
cake, providing positive cash flow that will increase over time as your liability reduces at a predictable rate.
There are several ins & outs to strategize: liquidity for a down payment; calculating ROI; finding the right location and property. The right team of partners can help you get underway.
- The Movin’ Up Ouster: Cash-out re-fi your existing home to purchase your next home, then rent out the old home. By the time you retire, you could enjoy a nice boost to your retirement revenue stream.
- The College Tuition Bender: Offset Junior’s exorbitant college cost by investing in a student rental, saving campus housing costs while building equity that – if Junior behaves – he or she can earn ownership/inheritance into.
- The Portfolio Foilio: Get out from under a RMD (mandatory distributions)
in retirement that will elevate your tax bracket and instead borrow against part of your fund to finance a rental. With the right structure and a good tax accountant, you can positively impact both your revenue stream and taxation scenario.
