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As a general rule, the earlier in life you invest, the more opportunity you’ll give yourself to grow wealth. That applies whether you’re buying stocks, bonds, or real estate. But if you’re wondering whether there’s a cutoff age for the latter, the good news is, there isn’t. You can actually invest in real estate at any stage of life. But your approach might differ if you’re older.
Investing in real estate at a later age
When we talk about investing in real estate, there are several avenues to take. You can:
All of these are feasible at any age, so let’s explore each one. And let’s also assume you’re older — old enough to be retired, in fact.
Buying an income property
Becoming a landlord can be a full-time job, but if you no longer have a job, you might have the time to buy an income property and oversee it, deal with tenant issues, and collect rent. On the other hand, you might want to enjoy your retirement without putting in all that work, or you may not be in the right physical shape to do maintenance on an income property. And when you buy a rental property, you run the risk of vacancies or tenants who don’t pay, both of which could result in cash flow problems. You’ll therefore need to weigh the pros and cons before buying a home to rent out.
Many people have success flipping houses, and even if you can’t do the work yourself, you can always outsource it if you’re able to snag a home at a low-enough price and still come out ahead. House flipping is risky because you could wind up over renovating and losing money. Similarly, the longer a flipped house sits on the market, the less likely you are to command top dollar for it — and the more time money you might need stays tied up. Once again, you’ll need to compare the pros and cons.
Buy and hold
Buy and hold is a common strategy used with stocks — buy up quality companies and let their stock values increase with time. It’s a good strategy in the real estate world — to a point. If you can afford to buy and maintain a home, there’s a good chance its value will naturally appreciate in time. The question is: Do you have that time? And would you be better off with an income property that puts rent money in your pocket along the way?
Buying REITs is probably your least-risky choice. REITs are companies that own or operate income-producing properties. With REITs, you don’t own a physical piece of property, and as such, you don’t assume the many expenses that come with it. Rather, you buy REIT shares as you would stock shares and benefit from the dividends those REITs pay.
REITs are a great choice for older investors because there’s little legwork involved. Sure, you’ll need to read up on the REITs you buy, similar to how you’d vet a stock before adding it to your portfolio. But you don’t need to put in the same amount of work that comes with being an actual property owner, and you also won’t wait years to collect income from your investment.
What’s the right move for you?
Real estate investing isn’t an option limited to people of a certain age. You can get in when you’re young or start when you’re older. Either way, the key is to assess your options and see which best align with your risk tolerance and the time commitment you’re willing to make. But know this: Real estate can be a rewarding investment for retirees, and if you missed the boat on it during your working years, it’s never too late to get in on the action.