If you’re dealing with a smaller-than-desired nest egg, you may be looking for other ways to create retirement income. Two of the most common ways to do so are investing in the stock market and investing in real estate. So how can real estate help retirees, and what are the pros and cons to investing?
Whether it’s an office space, a residence, or a vacation property, investing in real estate can mean tangible returns for retirees. If you have the money to drop on another property in addition to your own home, this strategy can be safer and more lucrative than the unpredictable stock market if you’re willing to put in the work.
The strategy is simple: invest in a good property (or, if buying a fixer-upper, make sure you have the capital to bring it up to rental shape), filter through applications to find a trustworthy tenant or tenants, and then with minimal work you can make money off of that rental that will help sustain you through retirement, where income isn’t as free flowing as it once was.
Purchasing property was once a dream only the wealthy could make good on during the housing boom. We are currently living in a buyer’s market, meaning it’s easier than ever to make a profit renting out space in a property. Unlike stocks, real estate is a slightly more predictable option because it’s a physical asset and it’s yours until you opt to sell it.
When making such a large purchase, it’s important to focus on the facts. Location is key, because if you can’t find reliable renters then you’re looking at a money pit rather than a smart investment. Look at trends and see what areas have booming rental markets, and talk to a real estate advisor for advice. Professionals who are in the business are bound to have a better idea of what type of property to purchase and where to purchase it. This will increase your chances of making good money off of your investment.
It’s also important to talk to the experts so you fully understand the legal ramifications of renting. Upon renting, you become the landlord, meaning it’s important to know your state and city’s laws. Being a landlord also means, in most cases, being responsible for certain repairs, so retirees must think about whether or not they’re willing and able to do the handiwork. And if not, the cost of hiring a maintenance company.
Overall, purchasing and renting out a real estate property can be a very smart investment for retirees if done correctly. If you have the initial funds, rent money is a great way to keep cash coming in long after you stop working. Just remember to really do your research before making any kind of major investment, your nest egg will thank you.