PLANNING YOUR RETIREMENT WITH REAL ESTATE INVESTING

Most tried and tested investors look to real estate as a means to generate additional income as part of overall preparation for retirement - and for the right reasons! The crux of this can be applied thanks to the passive income from rental properties to provide enough cash flow to be used as rental income. It’s no wonder why running a rental property can be a lucrative means to create a financially independent investor. Strategy Properties is here to let you in on our take on earning income for retirement through rental property investments.

SOURCES OF RETIREMENT INCOME

Of course, this is assuming that you’re no longer working on a daily job. So where does your income come from? There are basically three common sources, namely:

Social Security

To take advantage of this, you must have been employed under an employer who paid security taxes on your behalf. A lot of U.S. residents see this as a secondary or primary source of income when it comes to retirement. However, those who’ve worked in the real estate business wouldn’t rely too much on this benefit, since they haven’t worked with an employer who generally handles their taxes.

Individual retirement accounts

Generally speaking, this is money that you’ve set aside for yourself. If you happen to have worked with an employer prior to retirement, they may have matched your savings to a small degree, which in turn will have certain tax advantages. Some retirement accounts that are common are 401(k) plans. 

Pensions

Traditional pension plans are still utilized. These retirement plans were mainly replaced by most private companies to the 401(k) that we know today. The reason why this can still be used is that some individuals have it up to this day. Those who’ve served in the military for more than 20 years or so, municipality workers, and teachers are some of those who still use pensions.

DRAFTING YOUR STRATEGY

By using the different retirement plans we’ve mentioned, you can make a hefty amount of income through rental properties. Your strategy needs to start with owning rental properties first before you can have something rented out.

After acquiring a property, any major renovations should be taken care of to avoid any complications so you can have the property generate cash flow as soon as possible. You should also pay attention to other variables like location & proximity to jobs. These factors should be good & ironed out to secure your soon-to-be source of income.

Remember, running a rental property is no easy task. It’s mostly a give-and-take relationship when it comes to your tenants. If they aren’t getting their money’s worth, slapping an increase in the monthly rent wouldn’t be a wise decision. A tenant would most likely think about their current rental rate and walk away if it’s too high. However, if your tenants are generally happy and well taken care off, they're mostly satisfied with how you manage things, market increases in rental rates can be strategically increased after the lease expires or in between tenants. 

PREPARING FOR THE ENDGAME

The age at which you plan to retire is pivotal. If you’ve been working a nine-to-five job for an employer and plan to retire by the age of 65, you may have your work cut out for you. If you’ve served in the military and retired from service at your early 30’s or 40’s, you have the rest of your life ahead of you. Whatever it is, you still have a lot to learn, as well as mistakes to make. Any seasoned investor will tell you to start investing as soon as possible, and rental properties would be a great source of income. 

Planning for the endgame when your day job comes to an end is of great importance. If you’ve garnered enough assets to live comfortably until the end of days, you can start working with professionals to set up some sort of transition plan for your heirs. It’s advisable to do this sooner rather than later. Why? There can be serious tax implications when leaving rental property investments behind without a plan.

What happens if you haven’t gained enough assets upon your retirement? Not to worry, since you can consider selling the ones that have enough equity when you retire. With a clear understanding of the value of your rental property, you can sell them if need be. The equity from this can be used to fill your pockets to take care of your day to day needs, but the continual passive income is best.

Knowing the ropes to using your rental income for retirement is no easy feat. There can always be good and bad housing market conditions that might spring up along the way. It takes a lot to navigate through them and work through these challenges before settling in for retirement. However, it doesn’t always have to be as overwhelming or stressful as it is. All it takes is working with like-minded individuals who can work with you when it comes to achieving your real estate goals.

Such individuals can be found at Strategy Properties. Our team of professionals have in-depth knowledge when it comes to the ordeals of property management, and can deal with any issues accordingly. To learn more about our services, contact us at (734) 744 - 5080 or you can reach out to us via email at [email protected].