By Lori Funk
As more professionals look to grow their wealth beyond their primary careers, real estate has become a popular strategy for building long-term security. No longer reserved for industry insiders, property investment is becoming a cornerstone for those who want their capital to work as hard as they do.
Whether you want to hedge against inflation or build a multi-generational legacy, real estate provides a tangible path to growth. In private banking, we help clients connect with teams that support them from finding partners to securing financing. Below are key insights for getting started.
Diversify investment portfolio
Real estate can offer a strong rate of return compared to other investment options, like the traditional employer-sponsored 401(k) many people use as their primary retirement plan. Careful research is essential before making a purchase. Evaluating your existing investment portfolio can help determine how real estate might complement your financial strategy. Consulting a trusted financial advisor can also provide insights into how real estate investments align with your goals.
Build equity and earn income
While homeownership can require high upfront costs, it also offers long-term benefits. Owning property may also serve as a hedge against inflation. Some investors choose to acquire rental properties, whether residential or commercial, to generate income. Before investing, it’s important to weigh the advantages and disadvantages of different property types. While rental homes or apartments may seem more manageable than office spaces or retail buildings, the right team and resources can make either option successful.
Boost cash flow
Financial independence, especially in retirement, is a key goal for many investors. Creating multiple income streams outside of a primary career can help achieve this objective. For those who prefer a less hands-on approach, real estate investment trusts (REITs) and exchange-traded funds (ETFs) offer alternatives to direct property ownership. REITs own and manage rental properties such as apartments, office buildings, and shopping centers, distributing income to shareholders through dividends. ETFs provide professionally managed, diversified stock portfolios that may include REITs. While both options can offer reasonable returns, thorough research and financial guidance are crucial before making an investment decision.
Sweat equity and strategic investing
Real estate also offers opportunities to build wealth through sweat equity. Investors who purchase undervalued properties, renovate them, and either rent or sell at a higher value can build significant wealth over time. Strategic investing, such as buying in emerging neighborhoods or short-term rental markets, also allows individuals to maximize returns without needing immense initial wealth.
Acquiring or investing in real estate can be a complex process, but when done carefully, it can yield significant financial rewards. Be sure to assess your current and future financial plans, consult a trusted financial advisor as needed, and conduct thorough research before committing to any investment. The Arvest Private Banking team can help you get started.
Lori Funk is senior vice president and private banking manager for Arvest Bank – Greater Kansas City. She can be reached at lfunk@arvest.com.
With more than $27 billion in assets, Arvest is a full-service bank that delivers financial solutions to individuals and businesses of all sizes. Since entering the Kansas City market in 2009, Arvest has grown to become a top 20 bank and the sixth-largest mortgage lender in the metro. The bank has 20 locations in the metro area, including eight in Johnson County.
Services provided by Arvest Private Banking. Qualifications required, see a dedicated Private Banker for more details. Member FDIC. Equal Housing Lender.
Investment products and services provided by Arvest Investments, Inc., doing business as Arvest Wealth Management, member FINRA/SIPC, an SEC registered investment adviser and a subsidiary of Arvest Bank.
Investments and Insurance Products: Not a Deposit | Not Guaranteed by the Bank or its Affiliates | Not FDIC Insured | Not Insured by Any Federal Government Agency | May Go Down in Value
