The retirement age seems to be getting older every year, and for many, it’s not by choice. Many people dream of the day when they can leave the workplace for good and devote their time to family, a little “R & R” or their favorite hobby. In fact, according to Transamerica Center’s 15th Annual Retirement Survey, 78 percent of workers are actively saving for retirement, either through their employee benefits or a source outside of work. Some people can leverage rental property as a source to fund their retirement income. If managed effectively, renting out property could provide the necessary funds to help you retire when you want to. So, how can you pay for your retirement with rental income? Follow the tips below to get the most profit out of a rental property.
Whatever your budget, owning rental property can be very rewarding – if you pick the right property. To find a property that will help provide long-term return, look for these characteristics:
Size: Potential equity can be found in single-family homes with a spacious lot for future additions and renovations. Schools: Both young and established families prefer to live near good school districts. Age: Older homes may require more repairs and ultimately could cost you in the long run.
Buying a rental property means incurring the same costs as if you were buying a home to live in yourself. Try to save a certain amount of your income each month in a separate account and don’t touch it unless it’s for the rental. Landlords are responsible for a down payment, closing costs and any repairs once the home is purchased. Be sure to also have an emergency fund set aside for unexpected breakdowns.
Rental prices don’t always drop when housing prices do, but they will generally go up with the market. By increasing your rent 2 to 3 percent to account for inflation, you can increase your profit margin overall. Most people want to retire and be able to enjoy their later years without having to work, but it seems that is getting more difficult to achieve. If you follow these tips and become a smart landlord, you may generate supplemental income that can help make this dream more of a reality.