Reasons Commercial Real Estate BEATS Your 401K!

  📍 You think your 401k is gonna be enough for your retirement? You might want to think again. Here are 3 reasons why commercial real estate is a better path for retirement than your 401k.

Number 1: Inflation protection. Whatever you’re gonna do in your 401k is gonna be great. The market is gonna do awesome, but your investment is gonna get eroded every year by 2 to 3% on average and even higher. 6, 7, 8% like we had in the last few years. So when your investment projections say, oh, you’re gonna have a million dollars for retirement, $5 million for retirement in your account, you have to scale it back and realize that over 20, 30 years, it’s gonna be about half of the purchase in power.

Then you have to today. So if your projection say you’re gonna have, let’s say, $3 million in 30, 40 years, it sounds amazing. Sounds a lot. But in reality you have to cut it in half just for adjusting to inflation. But if I own a commercial real estate, my rents are gonna go up with inflation.

They’re gonna escalate every year or every few years. And it’s gonna keep up with inflation, and that’s why it’s a much more secure way to look at your numbers. Reason number 2: your money is not gonna be locked for the next 50 years. If I’m 20-year-old, 30-year-old, and I’m putting money into my 401k, I can’t touch it until I’m 60.

It doesn’t matter if I have a life event like a new kid, or I wanna buy a house, I wanna relocate. I wanna do anything with that money. I can’t because it’s locked in a retirement account until a 60 If I want to actually pull it out because it’s my money, then the government comes in and say, okay, I’m gonna tax you and I’m gonna give you a penalty.

So it’s gonna be tax at ordinary income rate, and it’s gonna be an extra 10% of penalty. That’s a lot of money that you’re gonna leave on the table just by accessing money that you’ve earned. Number 3: Tax efficiency. Your money in your 401k. When you get to the point when you can withdraw it when you’re past 60, it’s gonna be taxed at ordinary income.

So if you are a very successful president, you worked hard for 30, 40 years, you accumulated a very nice nest egg and you wanna live life, you wanna enjoy life, you wanna withdraw six figures every year. Now you’re at the highest tax bracket again, and you’re paying 35 to 40% on your every dollar that you withdraw.

And. Why lose all that money? When I’m invested in commercial real estate, all the cashflow that comes in throughout the entire year is gonna be taxed at capital gain tax, and that’s about 15 to 20% for most people, and a lot more tax efficient than dealing with 40% ordinary income. So I’m not even talking about those states where there is state income tax and that’s gonna get taxed as well on your ordinary income side of things.

So this is just 3 reasons. There is a hundred more that I can give you. If you want to talk more about investing in commercial real estate, give us a shout.

My name is Joseph Gozlan. I’m Your Retail Navigator for the Dallas-Fort Worth Market. And you can leave us a comment below. You can shoot us a message or go to our website, ebgtx.com and we’ll be happy to help you start investing in commercial real estate.