rental real estate

ID:268453

The days of trusting Wall Street to give you a good return on your investment are over. The economy is uncertain, and when you hit the age of retirement, it’s important to think ahead to your future and consider ways that you can have a constant stream of income. Many retirees are finding out that rental real estate is indeed a good investment, and it has been proven time and again that rent always goes up– regardless of the state of our economy.

In a recently conducted study, 344 retirees were interviewed, and of those, 19 percent received their retirement money from a rental source. To help you gauge whether this is an investment you will want to make, here is out list of pros and cons:

Rental Real Estate Pros

When looking back at the past decade, real estate property prices have significantly depreciated. Additionally, mortgage rates are at an all-time low, which means that with the right research on your part, you can find a property that can gain your substantial appreciation over the years. Most investors claim that single-family homes and small condominiums offer the most return on your investment.

Since the current prices of real estate are quite low, you can get started in your endeavor to generate extra income right from the start. Additionally, you can receive tax breaks from the government for owning a rental unit.

You can offer a month-to-month rental service and for desirable times of the year, use your property as a vacation home for you and your family. This allows you to purchase a home near the beach or on a local golf course, and by renting it out when not in use, you can offset your vacation costs.

Rental Real Estate Cons

You can’t flip your real estate for a quick profit, so when you invest, you need to be prepared to be in it for the long haul. Another problem that many investors face is that no-money-down mortgages are a thing of the past, and though mortgages are affordable, it’s hard for investors to qualify for loans. You also have to be prepared to provide the costs of down payment, closing fees, legal fees, renovation costs, and operational costs of keeping the home running if a quick tenant is unable to be found.

As a landlord, even in your retirement, you have to consider the extra responsibilities you will be faced with. It is entirely up to you to find the right tenants, run background and credit checks, collect rent, and fix problems on the property. You can sign with a property management company, but the costs are exorbitant.

Lastly, you will need the help of an accountant. Though you do get tax benefits, you will still need to pay the government at some point.

It can be said that investing in real estate is a good idea if you have the time, energy, and can pay the upfront costs necessary to make it lucrative.