'My Rentals Fund 60% Of My Income' – How Retirees Are Investing In Real Estate

Today's retirement looks a lot different from what past generations experienced. People are living longer, they are more active, and they are looking for ways to make the most of their wealth and time. Many believe they will need well over $1 million to enjoy retirement. 

Benzinga talked to active real estate investors in real estate investment trusts (REITs), direct real estate investing, and real estate crowdfunding to understand why real estate investing makes sense as you age.

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Building Wealth Rather Than Drawing On Accounts

For many retirees, watching accounts slowly drain can add pressure to what should be a carefree time. Although Social Security, pensions and draws from 401(k)s and other retirement accounts can make up a good deal of income, worry about income can keep retirees from doing the things they'd most like to do. Joe Stance, owner of Stance Commercial Real Estate, says his residential rentals provide 60% of his income. He advises that new investors start with one property, like a duplex. "Real estate creates wealth over decades, so find quality tenants and deals. I own condos, duplexes, and fourplexes in three states," said Stance. 

Garrett Ham, a lawyer and CEO of Weekender Management, says 30% of his clients are retirees who rely on rental income to fund their retirement. Many of them have diversified portfolios that include both residential and commercial properties, as well as REITs.

The Gift Of Time In A New Way

When you are a young investor, the gift of time means you have many years to accumulate wealth. By investing in the stock market, bonds, and REITs, you can see your funds grow over time through the benefits of compound interest. In retirement, you have another gift of time. You can study and learn about a new field. Many people who feel they might be bored in retirement have found that real estate investing is a way to stimulate their minds and stay engaged.

 David Fritch of Elite Tax Strategy Solutions is a CPA and tax strategist who says real estate has been key to finding his retirement. "Focus on locations and property types you know well," he advises. "I prefer smaller multifamily in suburban markets, as they provide steady cash flow and tax benefits. Learn the fundamentals of real estate, secure quality tenants, reinvest profits, and hold long-term."

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Building A Multi-Faceted Portfolio

Real estate investing doesn't always mean just direct real estate investing. Many investors Benzinga spoke with are also layering in REITs and real estate crowdfunding investments. David Blain of Blue Sky Wealth Advisors noted that REITs focusing on apartments, storage units, and senior housing provide steady returns. "At 72, my real estate investments generate over half my retirement income, providing stability and growth to fund my lifestyle for decades to come," he said. 

Matt Morgan of IPA Commercial recommended a similar strategy. "In my experience, the key is diversifying across property types and locations. I have rentals and REITs in retail, office and residential spanning California and Arizona. This mitigates risk while providing steady income. With patience, real estate builds wealth over time. My rentals have tripled in value over 15 years, securing my financial future."

There are risks in any investment. That's one reason diversification, especially in retirement, is so important. Retirees on a fixed income may be less likely to want to risk their nest egg. "No investment is perfect, and real estate requires capital, but for retirement income, I haven't found better. My rentals generate income I can’t outlive and equity I can borrow against in emergencies. For me, real estate is the gift that keeps on giving in retirement," added Morgan. 

Earn Income From Real Estate Without Being A Landlord

The current high-interest-rate environment has created an incredible opportunity for income-seeking investors to earn massive yields and you don't have to own property to do it…  

The Arrived Homes investment platform has created a Private Credit Fund, which provides access to a pool of short-term loans backed by residential real estate with a target 7% to 9% net annual yield paid to investors monthly. The best part? Unlike other private credit funds, this one has a minimum investment of only $100. 

Looking for fractional real estate investment opportunities? The Benzinga Real Estate Screener features the latest offerings.