Planning for a comfortable and secure retirement is a priority for many individuals. While traditional investment options like stocks and bonds play a crucial role, there’s another avenue that holds great potential, rental real estate. Let’s explore the 12 key benefits of investing in rental real estate for retirement, shedding light on why it is a smart strategy to consider.
Steady Passive Income – Rental real estate offers a consistent stream of passive income, providing a reliable source of cash flow during your retirement years. This income can serve as a supplement to other retirement funds, ensuring financial stability and peace of mind.
Inflation Hedge – Rental income has the unique advantage of increasing with inflation. As living costs rise, rental prices can be adjusted accordingly, safeguarding your purchasing power, and allowing you to maintain your desired lifestyle.
Potential for Appreciation – Investing in rental properties allows you to benefit from potential long-term capital appreciation. Over time, your properties can increase in value, presenting the opportunity for substantial gains and a higher return on investment.
Tax Benefits – One of the significant advantages of rental real estate is the array of tax benefits available to investors. Deductions for property expenses, mortgage interest, and depreciation can help lower your annual tax liability, effectively maximizing your income in retirement. Tax deferred exchanges and favorable long-term capital gains rates are also significant advantages.
Diversification – Including rental properties in your investment portfolio provides diversification, reducing the risk associated with relying solely on traditional investments. Real estate often performs independently of the stock market, adding a valuable layer of stability to your retirement plan.
Tangible Asset – Unlike intangible investments, rental real estate is a tangible asset that you can see and touch. Owning physical properties provides a sense of security, especially during turbulent economic times, and serves as a valuable asset that can be refinanced without triggering tax on the mortgage proceeds.
Equity Buildup – As tenants pay down the mortgage on your rental property, your equity in the property increases. By the time you retire, you can have a significant amount of equity built up, offering a potential source of additional retirement income through refinancing, selling, or leveraging that equity.
Control Over Investment – Investing in rental real estate grants you control over your investment. You can make decisions regarding property management, rental rates, and property improvements, allowing you to align your investment strategy with your retirement goals and preferences.
DownsizingOptions – Rental property investments provide flexibility and options for downsizing in retirement. If you own multiple properties, you have the choice to sell some and generate income while simplifying your responsibilities as a landlord. Another option could be to sell your personal home, take the capital gain exclusion, reinvest the proceeds for more retirement income, and move into one of your current, smaller rentals.
Legacy Building – Rental real estate offers a unique opportunity to create a lasting legacy. You can pass down your property to your heirs, with the tax advantage of a step up in basis, providing them with a valuable inheritance and potentially securing their financial future.
Ability to Leverage – Investing in rental properties allows you to leverage your investment. By utilizing financing options, you can multiply your returns, potentially amplifying your wealth accumulation and retirement income.
Flexibility – Rental real estate offers flexibility throughout retirement. You have the freedom to adapt your investment strategy to match your changing lifestyle and financial goals. Whether it’s adjusting rental rates, exploring different property types, or exploring new markets, you can customize your approach to maximize your returns.
Investing in rental real estate for retirement can unlock a range of benefits that contribute to financial security, steady income, and a comfortable lifestyle. From passive income to potential appreciation, tax advantages to legacy building, rental properties offer a path to a blissful retirement. By carefully considering the advantages discussed, you can make informed decisions investing in real estate for your retirement.
Download our Rental Income Properties guide. If you want more information, and your agent is not familiar with rental investments, we would love to work with you to better understand the opportunities.
Navigating a real estate transaction, which often involves substantial financial investments and emotional considerations, can understandably induce stress. To streamline this process, adopt these effective strategies that promote a smoother journey.
Begin by clearly outlining your primary motivations for either buying or selling a property. By eliminating distractions and maintaining a focused perspective, you can mitigate potential anxieties. For instance, if your primary goal is to secure more space for your family, evaluating properties without this essential feature becomes a straightforward decision.
Whenever feasible, allocate ample time to prevent hasty decisions or setting unrealistic deadlines. While external factors like a sudden job relocation or a booming market might necessitate swift responses, it’s crucial to differentiate between preparedness for action and arbitrarily shortened time frames.
Remember, orchestrating a successful transaction requires coordination with other involved parties such as title and mortgage companies, appraisers, surveyors, inspectors and possibly, attorneys. The ability to expedite your actions doesn’t necessarily imply that others can adhere to such accelerated timelines.
Anticipate encountering a few unexpected things during your home buying or selling journey. Recognizing the potential for sudden surprises can alleviate some of the pressure when they arise. When challenges do surface, counterbalance these concerns by reminding yourself of the favorable aspects associated with relocating, such as a home more conducive to your current lifestyle, a more convenient location, or other opportunities.
The ultimate strategy to alleviate stress when engaging in real estate transactions lies in partnering with a seasoned REALTOR® who possesses the expertise to navigate you through each step of the process, thereby facilitating the realization of your real estate aspirations.
Moving can be stressful enough without having to worry about being scammed by a moving company. Unfortunately, there are unscrupulous movers out there who prey on people who are in the midst of moving.
To protect yourself from being scammed, it’s important to be aware of the red flags. Here are a few things to watch out for:
The mover or broker doesn’t perform an on-site inspection of your household items and gives an estimate over the telephone or online. A legitimate moving company will always come to your home to inspect your belongings and give you an accurate estimate.
The mover or broker doesn’t provide a written estimate or says they will determine the cost after loading. A written estimate is essential to protect yourself from hidden charges.
The moving company demands cash or a large deposit before the move. Legitimate moving companies will accept credit cards or checks.
The mover asks you to sign blank documents. Never sign blank documents. This could give the mover the opportunity to add hidden charges after the move.
The mover or broker doesn’t provide you with a copy of the Your Rights and Responsibilities When You Move booklet and a copy of FMCSA’s Ready to Move brochure. These booklets contain important information about your rights and responsibilities as a mover.
The company’s website has no local address and no information about their registration or insurance. A legitimate moving company will have a physical address and be registered with the Federal Motor Carrier Safety Administration (FMCSA).
The mover claims all goods are covered by their insurance. This is not always true. Make sure you understand the terms of the mover’s insurance before you sign any contracts.
On moving day, a rental truck arrives rather than a company-owned or marked fleet truck. This is a red flag that the mover may not be legitimate.
The mover claims that you have more belongings than estimated. This could be an attempt to charge you more money.
If you see any of these red flags, it’s best to walk away from the moving company and find a more reputable one. You can check the FMCSA’s website to see if the company is registered and insured. You can also read reviews of the company online.
The lovely old house overlooks Lake Nokomis in south Minneapolis. Inside are spacious rooms — library, sun porch, dining room, kitchen, living room with fireplace, all elegantly remodeled and decorated. For the moment, the house sits empty, waiting for a foursome of would-be “Golden Girls” to make it their home.
Clockwise from left, “Golden Girls” Bea Arthur, Rue McClanahan, Betty White and Estelle Getty.
Roxanne Cornell, a self-described “social entrepreneur,” came up with the idea to open a house to be shared by a group of women in their 60s or 70s. It’s part of an organization she founded and calls Vibrante. If successful, it eventually will include other houses.
Cornell said she was inspired by “The Golden Girls,” the popular and award-winning 1985-92 sitcom about four single older women in Miami who, having responded to a “room for rent” posting, live together.
“I’m a fan of the show, so I thought, why don’t you create a ‘Golden Girls’ home?” she said. “The Golden Girls cared for each other. Loved each other. Had fun together. Just because you’re 80 years old doesn’t mean you can’t have fun.”
As a social worker who long served as a life-care planner for a group of lawyers specializing in elder care, Cornell saw flaws in existing living arrangements for aging people. She noticed that residents of larger senior developments were often isolated, especially if they weren’t naturally outgoing. Cornell envisioned a more intimate housing arrangement — a place where women would have someone to talk to when they got home at night.
So she bought the house for $580,000 and put another $300,000 into remodeling it, including creating four personal “suites,” each with its own bathroom.
Cornell, 62, won’t be living there herself — she lives nearby, with her spouse — but will serve as a “concierge,” helping with “anything from getting tickets to the Guthrie and dinner reservations and setting up transportation if you want somebody to go to the doctor with you,” she said. “If you need some help navigating the system, whatever that system might look like, I could be an advocate.”
Since the residents will presumably start off as strangers, Cornell plans to select a compatible group. Her vetting process will include questioning candidates about their lifestyle habits, politics and values and ways of handling conflict.
Her social work has required her to analyze human behavior, and she has confidence in her ability to select like-minded individuals. “I only hope these women will bond, and make friends and care for one another. That’s what I envision.”
They’ll also be fairly affluent. Rents at the house range from $2,700 to $4,400, depending on the size of the suite. An additional $350 monthly fee covers maintenance and concierge services. Future Vibrante households may be smaller or less expensive, Cornell said.“This is a social experiment. No one wrote the book on how to do this. But I have lots of faith that this is going to work,”
Practical and (Mostly) Painless Tips on Ways To Pare Down Your Possessions
You don’t have to know where you are moving or when in order to tackle one of the toughest parts of changing homes . . . eliminating the excess in your life. You can save pain and strain by downsizing. You’ll have fewer things to pack and move and an uncluttered home that is more attractive to buyers.
‘Tis A Gift to be Simple, ‘Tis a Gift to be Free
Most of us have too much stuff: everything from clothes to collectibles, hobby materials, things we’re storing for our children, and things we’ve been meaning to fix. If a move is in your future, start dealing with these surpluses now. Here’s how.
Today’s real estate market has become more mobile and technology dependent with relocation on the rise. So, for those who have been in their homes for many years, the thought of moving and selling can be daunting and overwhelming.
Selling a home today is VERY different than it was thirty, or even twenty, years ago. The newspaper listings that once drove home sales have been replaced by high tech tools like virtual tours, social media, blog articles and more. Working with real estate brokers and agents who are current in technology has become essential for your home to compete in this fast-paced marketplace—and bring in a top-dollar sale!
Once you’ve come to the conclusion that it’s time for a new home, there are a few things to think about before you try selling your current one. The first priority should be to find a good real estate agent you can trust. A trustworthy agent will help you to set a price that will meet your timeline and financial objectives, and help you to develop a plan for sprucing up your home so it makes the best possible first impression on potential buyers. Remember, the first impression is a lasting one while you may not want to go “all out” and “stage your house for sale”, there could be some minor things you can do so your house makes a great first impression.
#1. Well Begun Is Half Done–Seven to nine weeks before you plan to move:
Using a measured floor plan (these are often available from your new community) determine which furniture you’ll take to your new home and where it will be placed. If you are downsizing think about using furniture that has a dual purpose, for example a coffee table that has storage capacity.
Ask movers for estimates (in writing). Ask about insurance and delivery time, as well as what items they cannot transport. Moving yourself can be cheaper, but hiring a packing, moving company lightens the burdens considerably. Senior move firms can orchestrate the entire move or do part of it. They will even unpack and arrange your belongings the way you want, making sure lamps are plugged in, computers are hooked up and remote controls are programmed before they leave. Ask for a free consultation.
Identify items that can be sold, given away, or thrown out.
Open a bank account in your new locale.
Request copies of your medical records, one for you and one each to be sent to your new physician, eye doctor, and dentist.
Start using up things that can’t be moved; frozen foods and housekeeping supplies.
Is it time for you or one of your loved ones to move, in order to have a more rewarding or less worrisome life? This quick quiz can help you decide. If you answer “Yes” to five or more statements, you should: consider looking for housing that better fits your needs or start exploring ways to modify your house or your activities and responsibilities to make your daily life more satisfying and secure.
Practical and (Mostly) Painless Tips on Ways To Pare Down Your Possessions
You don’t have to know where you are moving or when in order to tackle one of the toughest parts of changing homes… eliminating the excess in your life. You can save pain and strain by downsizing. You’ll have fewer things to pack and move and an uncluttered home that is more attractive to buyers. (more…)
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