Most brokers agree that real estate is a great way to earn a living. To a large extent, you’re the captain of your ship, with lots of flexibility in deciding how you want to build your business. But that flexibility also creates special challenges, such as variances in monthly income.
Most real estate professionals also lack access to important retirement saving benefits, like the pension plans and profit-sharing plans enjoyed by many public and private employees. Largely, each individual has to shoulder personal responsibility in planning for retirement.
Even though business owners and self-employed professionals can lean on retirement planning tools like Simplified Employee Pension (SEP) accounts and individual 401(k) plans, as a real estate professional, you may be a strong candidate for another attractive investment option in your retirement portfolio: real estate.
Why Real Estate?
There are many compelling reasons to become a real estate investor. First, it’s safe to assume that you already believe in the power of real estate as a safe and profitable investment.
You also benefit from superior market knowledge. You’re constantly watching the dynamics of supply and demand play out in your market, which is extremely helpful for spotting trends and values. Plus, you probably have access to number-crunching tools to test your assumptions that an investment will be profitable.
Becoming a real estate investor also makes it much easier to gain business from a particular type of client: other real estate investors. By investing yourself, you learn the motivations, strategies and tactics that successful investing requires. Experience may be the only legitimate way to earn credibility with investors.
In terms of tax advantages, the Tax Cuts and Jobs Act of 2017 includes a new 20-percent deduction for sole proprietors and owners of pass-through businesses, which will likely be interpreted as being available to real estate investors. As with all tax-related issues, it’s important to seek the expert advice of a tax professional.
To raise your knowledge and confidence, consider taking REBAC’s one-day course, Real Estate Investing: Build Wealth Representing Investors and Becoming One Yourself. It’s one of the best and easiest ways to get up to speed on the ins and outs of real estate investing.
REALTOR® associations across the U.S. offer this course in a classroom format (visit training4re.com for dates and locations). It’s also included in REBAC’s pre-conference courses on Thursday, Nov. 1, prior to the 2018 REALTORS® Conference & Expo in Boston (visit REBAC.net/courses/conference-expo for details).
Total Financial Wellness
When it comes to successful financial planning, real estate investing is just one piece of the puzzle. You may also be considering other retirement planning strategies, such as preparing your business to be a saleable asset. That’s why the National Association of REALTORS® has been developing a comprehensive financial wellness program: The Center for Financial Wellness, an online resource designed to meet the unique financial needs of REALTORS®.
Marc D. Gould is senior vice president, Member Development, for NAR and executive director of the Real Estate Buyer’s Agent Council (REBAC). A wholly-owned subsidiary of NAR, REBAC is the world’s largest association of real estate professionals focusing specifically on representing the real estate buyer. With more than 30,000 active members, REBAC awards the Accredited Buyer’s Representative (ABR®) designation to REALTORS® who have completed the designation requirements. To learn more, visit REBAC.net.
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