As we approach the end of our working life and inch closer to retirement, many people worry about ensuring they have reliable income streams established. With this in mind, recent retirees and those soon to be retired should consider owning rental property. Rental property ownership is one of the best investments one can make to provide the financial security they desire to allow them to enjoy a happy and stress-free retirement.
Rental properties can add an extra stream of income to your retirement portfolio. Buying a property or two could provide enough income to even allow you to retire sooner. However, you’ll need to ensure your rental properties will become a steady, positive cash flow throughout your retired life. You don’t want a rental property to become a drain on your retirement resources. Here are a few tips to make sure your rental investment will work to your advantage.
Location, Location, Location
If you choose to make rental income the foundation of your retirement plan, be sure that you purchase the right properties. Choosing a property in the right school district, or in an attractive neighborhood, has a huge impact on the type of tenants your property will attract. For example, single-family homes in good school districts tend to attract families with children who are less likely to break a lease and remain tenants of yours for an extended period of time. Consistent tenants are crucial to creating positive cash flow.
Buying cheap won’t help you earn a return on your investment if you can’t find renters who want to be your tenants. Using an experienced real estate agent to help you find rentals near downtown, a college campus, or in an attractive neighborhood may cost you more upfront, but it will pay off over the long term to help ensure that you find an attractive property that will be a consistent source of positive cash flow.
Less is More
As a retiree, your goal should be to focus less on the headaches and hassles of maintaining, repairing, and managing your rental properties, and spending more time on the things that bring you joy. Finding a dependable property management service in your city will help achieve this goal. For example, retirees in central Florida looking at Orlando property management companies will want to find one with a reputation for being honest and reliable. Having someone on your side to screen out problem tenants, act as the point of contact for tenant concerns, and market your rental for you are just a few of the advantages of having a reliable and trustworthy property management firm working for you. The less you as a retiree have to stress about your tenant’s rent being paid on time, the more you can enjoy the free time you worked so long to finally have.
Another reason a portfolio of rental properties is such a great investment in retirement is due to the value of your rental property as it appreciates over time. As your property appreciates, you’ll also be paying down your mortgage, and your mortgage payment doesn’t increase. If you borrow a 30-year fixed mortgage, with a $1,000 payment, you’ll still be paying $1,000 per month 20 years from now. This acts as a shield from the rise of inflation– your rental becomes more valuable (also allowing you to charge more for rent), but your mortgage payment stays the same. This provides a secure and reliable source of income and is just another reason why real estate investment is such a good choice for retirees who want to generate wealth and create financial security in their post-work life.
Meeting your retirement financial goals can be as simple as owning a few rental properties. The wealth that real estate investment can create for you will help ensure that you expire long before your wealth does.