What Percentage of Your Retirement Savings Should Be in Real Estate?

Most people, even those with a limited understanding of finance or investing, recognize that real estate can be a valuable investment, especially when it comes to retirement savings. It can generate positive cash flow, grow rapidly, allow you to take advantage of financial leverage, and even help you insulate against the effects of inflation.

But at the same time, real estate can be risky. And it doesn’t quite stack up to other investment types, at least in some regards.

So if you’re planning for retirement savings, exactly how much should you be putting into real estate?

1. Ways to Invest in Real Estate

First, understand that there are many different ways to invest in real estate, and each of these avenues carries a different set of pros and cons.

Residential Single-Family Properties

One of the most straightforward and accessible options is to invest in single family, residential rental properties. These properties are relatively inexpensive, but they can help you enter the real estate market and start generating meaningful passive revenue. A single property won’t earn you a ton of cash, but if you accumulate multiple properties, the cash flow can be quite impressive. You’ll also benefit from appreciation over time. Managing residential rental properties can be challenging, especially if you’re inexperienced, but there are some practical solutions.

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