Do you want to retire early? Build generational wealth? Or even feel secure that you’ll have enough money to live out your golden years?

While military benefits, including social security and pensions, can help you reach those goals, they may not be able to supplement your retirement entirely. Instead of relying exclusively on your benefits, you can live more securely and freely by owning and transacting real estate.

This article will provide a step-by-step guide to help veterans and active military personnel reach their financial goals using real estate investing.

Why Real Estate Is the Best Financial Vehicle for Retirement

Most Americans agree that real estate is the best financial avenue toward wealth. And purchasing real estate has never been easier as there are a variety of ways to generate wealth with real estate via home flipping, wholesaling, tax lien investment, and rental properties.

Real estate offers several ways to generate wealth directly or indirectly, including:

• Cash flow: Generated from renting a property out at a profit.
• Asset Appreciation: Most land and property tend to rise in value over time.
• Inflation Hedge: Real estate tends to hold its value and rise with inflation.
• Tax Savings: Mortgage interest rates, property taxes, and home improvements can all be deducted on yearly tax filings.

Veterans have special benefits they can leverage, such as VA loans, tuition assistance, and disability, that give them financial advantages over investors.

Let’s explore how military members can explore these benefits and start building wealth to meet their financial goals using real estate investing.

Tips to Help Veterans Build Wealth with Real Estate

How to Start Investing in Real Estate

To begin any investment strategy, you’ll need capital. Fortunately, several options are available to access or generate capital without having a ton of money on hand.

• Maximize Military Benefits to Start Saving – Suppose you want to go the traditional route of saving money to put a downpayment on a property. In that case, you can leverage your military benefits to augment a portion of your discretionary income. Leverage direct benefits, such as disability or a pension, or programs like the VA Home Loan to secure favorable financing terms, making it easier to acquire your first property.
• House Hack with a VA Loan – Instead of using your VA loan to buy a single-family home, you can explore a loophole that allows you to generate cash flow by house hacking. Essentially, house hacking allows you to live in one unit of a multifamily home while renting out the other units. Since VA loans are restricted to primary residences, this gives you a great way to purchase your first investment property using the low-interest rates and down payment options available under a VA loan.
• Find a Real Estate Partner – Split down payment costs 50/50 with another real estate partner, preferably somebody in the same military investment community as you. This allows you to invest in properties at half the cost and for half the risk.
• Crowdfund or Syndicate Deals with Partners – Real estate crowdfunding and syndication enable you to pool funds with other investors to participate in larger deals. This approach provides access to a diverse range of properties and spreads out potential risks.

What are the Best Real Estate Investments for Wealth?

After raising capital, it’s time to consider diversifying your portfolio with different types of real estate investments. This will allow you to generate more cash and hedge against risk. Here are a few.

Generate Cash Flow with Rental Properties

Rental properties offer consistent cash flow through monthly rent payments. Military members can leverage their housing allowance to invest in rental units, creating a source of passive income.

Just be sure to budget for repairs, taxes, and common fees. Over time, the profits from one unit can be used to purchase another and then another, serving as a compound interest investment.

Earn Quick Capital with Home Flips

House flipping involves purchasing, renovating, and selling properties at a higher price. While it requires active involvement, it can yield substantial profits relatively quickly.

Look for properties in strong need of rehab. The BRRRR (Buy, Rehab, Rent, Refinance, Repeat) method is a common real estate tactic that involves taking out a renovation loan and fixing up a property to above a certain percentage of the loan’s value, and then refinancing that loan, giving the money you put in back.

Diversify with REITs, Tax Liens, and Wholesaling

Instead of purchasing entire properties, you can generate substantial gains by investing in a piece of property. Assets like REITs offer investors shares of investment property that can be purchased like a stock on most regulated exchanges.

Tax liens offer another avenue of cash flow, enabling investors to purchase existing tax liens and collect the repayment. If repayment is not made, they receive the home as collateral.

Finally, wholesaling involves purchasing contracts and selling them to interested buyers at a fee. These strategies should be incorporated with your overall strategy for greater diversity.

Tips to Protect Your Real Estate Earnings

Now, here are some tips to protect all of your earnings.

1. Delegate a Portion of Your Investments to a Self-Directed IRA

Want to never pay taxes on a real estate flip or wholesale again? When you purchase real estate with a self-directed IRA, all earnings go back into your individual retirement account tax-free.

While there are some stipulations, SDIRAs allow you to put dormant money from your TSP or Roth IRA into active investments that actually yield high returns. Self-directed IRAs for real estate are the best strategy to avoid taxes and scale your retirement account quicker.

Learn more about how to rollover a TSP into an SDIRA.

2. Utilize 1031 Exchanges

1031 exchanges are a tax loophole that enables you to avoid taxes on the sale of a property as long as it is reinvested into another like-property within 180 days. While designed to allow homeowners to purchase houses easier, this exchange helps investors keep their capital without giving a large portion to Uncle Sam.

3. Plan Your Estate Properly

Estate planning ensures your real estate assets are distributed according to your wishes. It’s essential to create a comprehensive estate plan that addresses inheritance and minimizes potential conflicts with inheritors, including around taxes.

4. Invest in Furthering Your Education

Finally, continuously educate yourself about real estate investing trends, strategies, and market conditions. Attend workshops, read books, and engage with experienced investors to make informed decisions.

By leveraging military benefits, exploring different investment strategies, and protecting your assets through proper planning, you can create a robust real estate portfolio that contributes to a comfortable and prosperous retirement.

Remember, each real estate investment requires careful consideration, due diligence, and a long-term perspective. With dedication and strategic planning, real estate can be a reliable path to financial independence in your retirement years.

FAQs

Can military members use their VA loans to invest in real estate?

Yes, military members can use a VA home loan to purchase investment properties, such as rental units or multifamily properties. However, there are specific criteria and limitations to consider.

Are there any special programs or benefits for military members looking to invest in real estate?

Yes, military members have access to VA home loans, which offer favorable terms, low or no down payment options, and competitive interest rates for purchasing real estate.

How can military members manage real estate investments while on active duty?

Military members can hire property management companies to handle day-to-day operations, such as tenant communication, maintenance, and rent collection, especially if stationed far away.

What are the risks associated with real estate investing, and how can military members mitigate them?

Risks include property value fluctuations, vacancies, and unexpected repairs. Military members can mitigate risks through thorough research, contingency planning, and seeking guidance from experienced investors.