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Are Rental Properties a Good Retirement Investment

Many people were programmed from a young age to funnel their hard-earned money into stock market-based retirement funds, with the end goal of living off the investment gains once they stop working. In contrast, other individuals realize that this traditional way of saving for the future is not the best financial path to take, especially with Wall Street being as risky and volatile as it is. Considering this, you may want to increase your knowledge base by learning about an alternative option to the 401(k) and traditional IRA retirement savings plan, which is utilizing rental real estate as an investment vehicle.

I’d like to begin with a quick answer to a question that I’m often asked, one that actually prompted me to create this article:

Are rental properties a good retirement investment? Rental real estate is an exceptional investment vehicle for those saving for retirement. It safeguards your funds against economic downturns and the volatile stock market, as well as preserves your wealth by being an incredible hedge against inflation. It also provides steady cash flow and amazing tax benefits, and allows you to control your funds by investing within a self directed IRA.

Why It’s Important to Reevaluate Your Retirement Plan Now More Than Ever

Those who were heavily invested in stock market-based retirement portfolios over the last few years know why it’s imperative to reevaluate your retirement plan.  Unfortunately, they know all too well because they learned the hard way when the Covid pandemic hit. During this time, retirement account holders experienced the harsh reality of the instability of the stock market when it crashed and brought down a good portion of their life savings along with it.

This was a wake-up call for many who learned that their way of saving for retirement was not as stable and trustworthy as they thought. I can imagine it was especially difficult for those who were set to retire that same year, only to have their gains instantly disappear from their accounts, causing them to delay their retirement.

With the unpredictability of the stock market, the current inflation causing more market volatility, and the fact that a recession is just around the corner, it’s clear that it’s not a wise strategy to place your entire nest egg in an investment vehicle that’s intertwined with the economy – it’s safe to say that it may be time to think about diversifying by incorporating rental properties into your retirement portfolio.

Reasons Why Investing in Rental Properties is a Wise Retirement Strategy

Of course, you most likely guessed that I’m going to bring up the fact that rental properties are a good investment strategy because, unlike stocks, bonds, and the like, they’re not affected by the roller coaster that Wall Street is typically on. However, there is much more to it than that; real estate investments actually offer many advantages that a 401(k) and traditional IRA can’t offer when it comes to growing your nest egg.

Below, I’ll cover some of the main reasons why rental properties are a good investment for those saving for retirement:

1. Rental Real Estate Provides the Ability to Recession-Proof Your Retirement Funds

From the above discussion, you’ve learned that when all your funds are tucked away in a stock-based retirement account, you have no way to safeguard your money.

In contrast to this, rental real estate, which is not controlled by Wall Street, can provide you with a stable and secure investment option for building retirement wealth. When your retirement account is real estate based, you can go to bed each night knowing that when you wake up, there isn’t going to be $100,000 unexpectedly missing from your retirement account due to the economy being affected by a war, a pandemic, or an announcement made by a government official.

The truth is that your rental property will perform just as well, no matter how bad the economy gets. Why is this the case? Well, because the performance of a rental property is not attached to the economy, and everyone needs a place to live, right? So, rent checks will continue to flow in as planned.

2. High Demand for Rentals Even During Economic Turmoil

Related to the above point on recession-proofing your investment, the current economy has been causing uncertainty within many industries with food shortages, staff shortages, and a lack of inventory of general items; however, the effects of the current economy have actually caused the real estate industry to thrive. What do I mean by this? You see, there is also a shortage of rental properties, and this is due to the affordable housing crisis that has been moving people away from home ownership and funneling them into becoming renters.

This supply and demand issue has created the rental real estate industry to flourish, to the point where new rental properties must be built to meet the demand. You’ll want to read more about this in our latest article – Rental Real Estate Trends – Increased Demand & New Construction Property Boom. In addition to this, the high demand has caused rental rates to go up, providing investors with a nice boost during inflationary times.

Dive into the following video for more info on this subject – I suggest skipping the pre-show and fast forwarding to 12 minutes into the video, where it discusses the topic at hand.


As you can see, rental real estate is a smart investment strategy when you want to ensure your funds are not only increasing over the years, but also protected from the elements that you have no control over – which brings me to my next point.

4. Investing in Rental Properties as a Retirement Strategy Gives You Complete Control Over Your Money

A traditional retirement account such as a 401(k) is typically under the direction of a brokerage house where the rules only allow for specific types of investments such as stocks, bonds, and mutual funds. In addition to this, let’s face it, most 401(k) account holders open the account and basically “set it and forget it” and let the brokerage run the show. Many individuals don’t even know what they’re even investing in, or what fees are being withdrawn from their accounts each month.

Really think about what the employees at your brokerage firm are controlling; they’re controlling your life’s savings, possibly, hundreds of thousands of dollars. And on top of that, let’s throw into the mix the fact that the economy and Wall Street are controlling the balance of your retirement account – are you starting to see the big picture here?

A Smarter Strategy – Investing with a Self Directed IRA

Now, let’s look at another scenario where you’re using rental properties as an investment vehicle, and you have 100 percent control over the decision-making process, your investments, and your money. This is the case when you use a self directed IRA instead of a 401(k)/traditional IRA to save for your retirement.

A self directed IRA puts you in the driver’s seat of your assets, and as the name suggests, you “direct” your account instead of a random brokerage firm employee that may not have your best interests at hand.

With this type of scenario, the cash flow that’s produced from your rental properties goes directly into your SDIRA. Now, imagine owning multiple properties and how much money would be funneled into your retirement account each month, untouched by anything that’s stirring up within the economy.

Passive Investing at its Best

If you’re thinking, “That all sounds great, but I like the fact that I don’t have to put any effort into my retirement account dealings the way I do with my 401(k)”. Well, when you place rental real estate within a self directed IRA, you can create what’s called passive income. This is the case because you actually won’t have to manage your rentals or put effort into keeping them up and running since a property manager will do all the work for you. So, you can have the same level of passive investing as you do with your traditional retirement account, all while having complete control.

Now that you’ve been introduced to self directed IRAs, you’ll want to watch this interesting video that we put together on “What Wall Street Doesn’t Want You to Know”:


I hope you’re starting to see the light on how rental real estate is a lucrative, secure way to build and safeguard your retirement funds. If you are, you may be wondering how to add rental properties to your retirement account, and I’ll discuss that next.

How Do I Add Real Estate to My Retirement Portfolio?

To add rental properties to your retirement strategy, you would have to first switch from your 401(k)/traditional IRA to a self directed IRA, as well as take all the necessary steps needed to purchase and rent out a property.

There are two ways of going about this, and that would be to either take all the necessary steps on your own by finding an SDIRA custodian, locating, buying, renovating, and renting out a property, or instead, work with a full-service real estate company that will take care of all the necessary steps for you.

Option 1: Take the Necessary Steps on Your Own to Make it All Happen

If you choose to go all out and do this on your own, you will first need to find a reputable self directed IRA custodian. I suggest either getting a recommendation from a trusted source on locating an experienced custodian, or do extensive research to ensure you find the right person/company. Also, it’s important to make sure they specialize in real estate and can show you a portfolio to back this up.

Once you find your preferred SDIRA custodian and all the steps are taken to roll your 401(k) or IRA over to a self directed individual retirement account, you would start the process of locating a profitable property. Keep in mind that you would need to get the approval of the custodian on the property purchase. However, you can skip the approval process and have full control by creating an entity such as an LLC, and then buying the property through that LLC. If this is done, you would never need the approval of a custodian to purchase a specific property, and you would also gain check-writing privileges for your account.

When going through the process on your own, if you don’t have real estate investment experience, you would need to educate yourself on where and how to purchase a property, the ins and outs of renovations, funding options, and so on. Below, I’m providing some articles that I put together that can help you along the way:

Please keep in mind that because of the current rental shortage, you may not be able to locate a property that makes sense financially – this is exactly why there’s a new construction boom going on at the moment.

Option 2: Work with a Full-Service Real Estate Company

If finding an experienced SDIRA custodian, locating a profitable property, figuring out what to renovate, finding reliable contractors, hiring a property manager, and placing a tenant is out of your scope of knowledge, Morris Invest can do all this and more for you. We can also get you set up with a self directed IRA, help you find additional funding if needed, and everything else in between.

The bottom line is that we can help you move away from your unstable and underperforming 401(k) or traditional IRA, and get you set up with a retirement account that can hold cash flowing properties that will consistently grow your funds, unaffected by the mood swings of Wall Street.

Profitable New Construction Rental Properties

If you remember, I mentioned that there’s a rental shortage; we have that covered as well because we only deal in new construction properties that we build from the ground up, providing you and your tenants with an exceptional new piece of real estate.

For now, we mainly build in Lubbock, TX, for many great reasons. You can read up on some of those reasons in this article that we created that explains why Lubbock offers a profitable and secure rental market – Lubbock Recognized as Recession-Proof City and Maintained a Strong Texas Rental Market Throughout Pandemic.

We realize that investing in real estate can seem overwhelming for some who have no experience, but when you work with a full-service company, you actually don’t need any experience at all; that’s where we come in and make it happen for you.

Check out the following video to take a deep dive into our new construction properties, the process, and the reasons why they’re more lucrative than one-off pieces of real estate:


Protect Your Retirement Savings Now By Investing in Cash Flowing Rental Properties

When it comes down to it, you should ensure you’ll be financially secure in your golden years, and not have to continue working because your retirement fund lost money during recessions, market swings, pandemics, and the like. When you invest in rental real estate, your funds are protected from these elements, and cash flow will be deposited into your retirement account like clockwork, month after month, year after year.

If you would like to inquire about getting moved over to a self directed IRA, or discuss our new construction properties, or rental real estate in general, feel free to schedule a call with one of our team members at Morris Invest.

I also encourage you to dive into more information about our company and all our programs that we offer to those who are interested in real estate investing, as well as anyone who would like to learn more about becoming financially independent.

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