Retirement Ahead- Borrowing to Invest in Real Estate

As the dooming era of retirement approaches for the baby boomer generation, the majority of us are aware of the daunting realization in scarcity of funds in both social security and pension plans.
However, along with our economy’s ceaseless population growth comes the advantage of alternatives retirement-funding options; specifically referenced in the “reconceptualizing retirement” chapters of Ross’s newest book, The Real Estate Retirement Plan.

Ideally, we all dream of the day when we finally reach the point of time when we pay off the final outstanding decimal points on our perceivably ceaseless mortgage.
However, the author presents an intriguing paradigm to be considered- Putting that dormant equity to work in investment real estate; taking advantage of the time value of money, of getting tenants to pay down your mortgage or multiple mortgages, of being able to deduct the interest income from your taxes, and ultimately of reaping the long-term capital gains that real estate has historically generated in Canada.
Now this concept may seem unorthodox and risky to those of us capable of accomplished meeting our debt averse goals, especially since it comes across as a less conservative approach to retirement planning, but there is more to this premise than meets the eye.

  • Real estate is less volatile than traditional investments since it is not “marked to market” every day like stocks; however it ends up generating returns similar to that of the stock market and “often more”.
  • Real Estate is taxed in a more favorable manner for tax-payers than both capital gains and interest deductibility end up being.
  • Acts as a hedge against possible inflation in the market
  • Provides diversification to an investor’s overall portfolio by favorably balancing a system of risk and return.

The author reinforces that real estate investments alone cannot work as a sufficient retirement plan, but must work coincide traditional investment instruments, like stock & bonds, to be truly sustainable.

The second author, Giannini, provides a compelling list of the primary methods to profit from real estate:

  • Paying down mortgages on investment properties
  • Positive NET cash flow, or after accounting for expenses
  • Providing the equivalent of an annuity even with ownership being restricted to only a few properties
  • “Forced Appreciation” that comes from renovating and improving properties, something flipping for quick sale.

This is where the author’s theory of “reconceptualizing retirement”, begins overlapping current & established methods of real estate investing like house-flipping. The most important aspect behind flipping properties for profit is making sure you are leveraging your assets correctly and as invulnerable as possible.
Taking advantage of multiple sources for funding your real investments has become one of the more vastly recognized strategies attributing to sustained profits among investors.
Hard Money loans have become extremely advantageous for investors due to the current and consistently changing regulations on mortgage loans. Hard Money lenders have the capability to provide private money loans backed by the asset itself. Private money has evolved into a top alternative to conventional mortgage loans and have the capability to get approved and funded in weeks!

Vintage Real Estate Fund has accrued new funds ready to lend!
Contact our local office today to determine if a privately funded, hard money if right for your next real estate investment.
415-938-7331
info@vintagerealestatefund.com

Source: http://business.financialpost.com/personal-finance/is-borrowing-to-invest-in-real-estate-is-a-better-way-to-fund-your-retirement-this-author-says-yes
FINANCIALPOST.COM
Johnathan Chevreau

Source:”The Real Estate Retirement Plan” (Dundurn Toronto, 2017)
Calum Ross
Giannini

2017-04-13T02:48:40+00:00