Secure Your Retirement With Rental Properties
Retirement can be some of the best years of your life if you have planned for it properly. By proper planning, think mainly about your financial situation in retirement. Way too often people will work their entire lives only to realize they do not have enough income to truly enjoy their retirement and will have to keep working in order to simply pay their bills. I.R.A. and a 401k type retirement accounts will certainly be a big part of your retirement income but the one retirement strategy that never fails and has worked for many is to invest in real estate early in life.
Why Rental Property?
There are several benefits that you will enjoy long before your retirement. Rental property is a good hedge against inflation as long as you have a fixed-rate mortgage, says prominent real estate investor Than Merrill. “Its ability to hedge inflation is one of the reasons I favor real estate over traditional retirement plans.” Than is one of the founders of Fortune Builders, a premier U.S. real estate education company based out of San Diego.
Interest rates will go up and down several times during your life but if your mortgage is fixed you are not affected. History tells us that the value of your property will increase dramatically over the years of your mortgage and there are numerous tax incentives. The biggest tax incentive available is depreciation, simply put, depreciation is a reduction in the value of the property over a predetermined period of time. Depreciation alone is one of the best opportunities to save for retirement.
What kind of rental property should I invest in?
A single family home is usually your safest investment. There are two important criteria that will be important to future tenants, preferably the home should be in a reasonably nice neighborhood and located within a good school district. It is advisable to buy a home that can be added onto in the future and on a large enough lot to accommodate future development. It is also recommended you buy a rental property close enough to where you live so you are able to check on your property every so often. Should I hire a property manager? a good property manager can certainly alleviate some responsibilities but you must consider whether the extra cost is necessary.
Things to do Before Purchasing
Before you buy a rental home there are several very important things you should fully investigate. Ask your real estate agent to provide you with information about what comparable homes in the neighborhood are renting for, how long they are staying vacant, and how fast similar property values are rising in the event you decide to sell the property. Naturally, you will want a full house inspection before you buy and should enquire into any added costs such as common area assessments.
Do your homework, be patient, and invest in rental property for the retirement you seek.