Dreaming of retirement? If you dream of lying half naked on a beach somewhere without a care in the world, then you’re not alone. Most people hope to retire someday while still having enough money to live the good life. However, if you’re like most Americans, saving for the future isn’t really your thing. That’s where real estate investing comes in. Building a real estate portfolio loaded with passive income is your ticket to retirement bliss. Don’t believe us? Let LandCentral show you the way. Check out our awesome tips for how to Reach Your Retirement Goals with Real Estate Investing:
First, what is Retirement Real Estate Investing?
Yep, it’s a thing. You know in Monopoly, when you scoot around the board buying up real estate so you can charge other players who land on that property? It’s kind of like that. Accumulating real estate assets in the form of rental properties will provide you streams of passive income in your retirement. Basically, the rent from the tenants living in your properties becomes your monthly/annual salary.
NOTE: This is different from traditional real estate investing that can range anywhere from flipping houses to vacation properties. Buy-and-hold real estate provides consistent cash without a signifiant amount of effort.
To acquire a portfolio of rental properties well before retirement, you need to first determine how much you hope to live off of in retirement. This will help you focus on securing the right kinds of real estate.
EXAMPLE: The average rental unit can generate between $400 – $1000 in monthly income. If the mortgage is paid off, that’s money in your pocket. If you choose to focus your real estate investing in commercial real estate like a 15-unit apartment complex, then you just earned a monthly income of $6,000 – $15,000 (pending mortgage and repairs).
So if you think you’ll need around $5,000 a month to live comfortably, aim to invest in properties that will help get you there.
Options for rental properties:
- Apartment complex
- Vacation units
Don’t forget about the perks!
- Major tax advantages.
- Simple compound interest to pay off your mortgage.
- Your asset will appreciate over time (unlike other investments).
- The money never runs out.
- You don’t have to worry about flipping houses or selling property.
Things to be aware of:
- Do your research. Don’t jump into anything too fast. If a property seems too good to be true, it probably is. Which means more work for you in the long run. Not really what you want in retirement.
- Have a separate bank account. Place all tenant payments into a separate property bank account. Rentals often need repairs and upgrades. This will ensure you have the money to cover those costs as they arise.
- Have enough to cover the mortgage yourself. Make sure you save enough money to cover the cost of the mortgage should your rental sit vacant. While most rentals are easy to fill, during a down economy, you’d hate to lose everything.
- Start small. Rome wasn’t built in a day, so it’s okay if your real estate portfolio isn’t either. Start by looking around, noticing good deals and being ready when you find one. Then slowly build from there.
So there you have it, LandCentral’s tips for how to Reach Your Retirement Goals with Real Estate Investing. Now you’re ready to sit easy on an island knowing that all of your finances are taken care of. You’re welcome.