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Investing In Real Estate for Retirement Income - Is It Right for You

If the thought of retirement is looming large over your head and you are wondering how you could continue to earn a comfortable living after you retire, investing in real estate can be the solution for you. It is true that investing in real estate can be a little tricky, but while people may have suffered tremendous loses, there are still many that can happily say their retirement days are well-sorted due to the large returns they got by investing wisely in the commercial and residential real estate market.

So if you want to ensure that you too have a steady reliable income for your future by investing in real estate, here are a few things that you should keep in mind.

Investing In Real Estate For Retirement

Study how the market works before you invest in it

Before throwing your hat in the ring, gather knowledge about the workings of the market. This will certainly take a while but with dedication and patience it can be done. You will have to find ways in which you can lower the risk involved while making sure your invested capital is protected.

You also need to be constantly aware of changes so that you can act before they affect you. By getting familiar with such trends you will be able to make smarter investments thereby reducing the possibility of incurring losses.

Sometimes you got to go with your gut feeling and battle it out

Since the real estate market does not have a fixed recipe for success, relying on your intuition from time to time may not be a bad idea. If you have a premonition about which areas of that place are likely to become popular or locations that won't pick up, don't hesitate. Go ahead and invest. But make sure your gut feeling is also guided by knowledge and also caters to your risk appetite. As there will also be times when despite the property being vacant, you will still have mortgage, property tax and repairs that will have to be dealt with. So if you have bought a property to flip, make sure you have the courage to keep your wits about you even if the place has not sold as quickly as you thought it would.

Consider different possibilities before investing

Different people rely on different things to help them in investing. Some may trust blind speculation and go in for land that can be easily sold or perhaps a house that requires minimal remodeling before being put on the market. But the smarter lot will usually go in for properties that yield income.

Although you never really know what accounts for depreciation of the market, you should always check off these points while investing:

  • The place should have a solid structure with respectable tenants
  • It should not need excessive repairs and should be well-located
  • The ability to pay the mortgage should also be kept in mind

So even if you do not have the skill of judging which place would soon become an ideal location, if you ensure these aspects are covered, you will be able to make a good investment:

Always have an adviser

If you are new to the market, it would do well to have an adviser guide your steps. You need not take his opinion if you differ, however he will help you tap into the potential to generate higher returns on your investment. Approaching a Registered Investment Adviser (RIA) will certainly help put you on the right track as you start out.

Clear the mortgage as soon as possible

Since the purpose of investing in real estate is to supplement your cash flow in old age, you should make sure that the place you invest in is free from any mortgage before you reach the age or retirement. The reason, it is important to get the mortgage out of the way is because there won't be much cash flowing in when the home is mortgaged. And besides paying for the mortgage you also need to bear the cost of repair and maintenance as well as insurance. So if you would still have a mortgage to bear post retirement, there would hardly be any income even if you get a good tenant.

It is a fact that making money in real estate is as unpredictable as the stock market however, by keeping these points in mind and by having a systematic approach and knowledge of the market you can certainly earn a comfortable living from prudent real estate investments. However, if you want to depend on the rental income for retirement you would need to develop a portfolio of more than one rental properties.