How Does Real Estate Fit Into a Retirement Income Plan?

Source: Investment News — 

Real estate investment offers plenty of potential: a hedge against inflation, sheltered income and asset class diversification, for starters. But owning a property directly carries expenses that can eat into cash flow. That can be problematic for investors who depend on real estate to generate retirement income.

How should you advise a client — liquidate or reassess? You need to understand your client’s goals for holding property within the broader context of their holistic retirement income needs and funding strategy — including whether to consider a 1031 exchange.

“It always has to go back to what’s best for the client, what their plan is, and what their needs and objectives are,” says Rob Johnson, head of wealth management for Realized, a platform that helps advisers manage investment property wealth.

Risks associated with direct real estate ownership

Like any other investment, direct real estate ownership comes with challenges that can create the potential for downside.