For many people, their home is their biggest asset and biggest expense. Many couples start their life in a small house then move to a larger home when they have kids, and eventually stay in that house until retirement. However, retirees don’t really need a large home once the kids have moved out. Even if the home is paid off, maintenance remains as an expense, and owners are paying to heat and cool rooms which are vacant. And that’s a waste of time and money.
This is why downsizing during retirement is the best move for retirees. They can live in a property that is fit for their needs and enjoyable for the rest of their lives. Yet with downsizing, comes hard decisions. Stay nearby or leave town? Condo or single-family house? Rent or own?
For investors looking for property, retirees relocating presents opportunities and creates demand. One way to find the best places to invest in real estate is by following the retirees. To begin finding and understanding these locations, you have to start by understanding retirees in general.
Related: Is It OK to Invest in Real Estate Just for Appreciation?
Why do most retirees downsize?
Downsizing is a move associated with retirees looking for smaller space after their kids have moved out and is also a move associated with financial sense. Instead of paying money for maintenance and utilities in an empty, large house, retirees choose to downsize in order to put money towards other needs and wants. Less space to maintain translates into less money to spend!
Downsizing opens opportunities for retirees; not only to save substantially, but also a new lifestyle. Downsizing means starting a new chapter in life. With a smaller property, there are less responsibilities and people can begin to focus on the other priorities in life.
The question is, where to begin? Many things are taken into consideration and kept in mind when retirees decide to downsize, like:
Should they rent or own?
If someone has owned their home for a long time and have little or no mortgage at all, they might assume buying is better than renting – mainly for a sense of stability. But for some, renting makes more sense. Why? Maybe because they don’t want to stay in one place for ever. Perhaps they want to move in accordance with their kids and grandchildren.
The rule is, if you are not absolutely sure you will be in the same location for more than five years, then don’t buy. In this case, renting is cheaper than buying on a short-term basis. Instead of coming up with a sizable down payment, retirees would only be required to pay the first month’s rent and a security deposit. If retirees are not looking for equity in their home at the end of their life, renting is a better option.
Related: Buying A Rental Property: Know Your Niche Market and What They Want
What does this mean for investors?
Investors spend a lot of time seeking the best places invest in real estate. By following retirees, they gain two very important things when choosing a rental market 1) population growth 2) high demand for rental properties. Having a property in the areas that attract retirees can be a real gain for investors. However, that means knowing what they want. As an investor, keep in mind these criteria that are important to retirees.
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The cost of living
The best places to invest in real estate, when renting to retirees, have a low cost of living. For retirees, they are seeking a way of life that allows them to spend in a much more relaxed manner. They spent more than 55 years of their life spending money, paying bills, and providing for the family. They’re now ready sit back, relax, and enjoy a simple way of living.
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Health-care quality and personal well-being of seniors
When finding the best places to invest in real estate for retirees, that means picking areas which provide the care they need. Make sure the investment property is close to hospitals and doctors. It should also be a place safe for their well-being. Don’t choose a neighborhood that is close to the city where seniors are forced to suffer from sleepless nights because of piercing noises.
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The vitality of the local cultural scene
Invest in real estate that has life and spirit. Pick an area that has a punch of culture and diversification and an area with beautiful weather. For retirees, they would be more attracted to an area that has a variety of activities, such as beautiful parks and gardens. Areas with different cultures are also sought-after, since seniors are more likely to choose an area that is out of their ordinary routine. They have been living in the same area for years, change can be good!
Now that you, hopefully, have a better understanding of the movement and perspective of retirees, it’s time to target their destinations.
Best Place to Invest in Real Estate: Top Cities Preferred by Retirees
1. Kendall, Florida
One important factor that a city must have when it comes to retirees is safety. And that’s exactly what Kendall offers. Investors should consider this city when they want the best places to invest in real estate. This suburb provides its residents with safety and convenience and is not far away from Miami where you can find a variety of social activities. Plus, Florida has no individual income tax! Retirees don’t have to stress about tax burdens.
2. Glendale, California
Also known as the “Jewel City,” Glendale is a perfect place to invest in real estate. Retirees who love Mother Nature and enjoy the great outdoors will definitely choose Glendale as their new home. This city scored best for its low incidence of crimes, which is of course a plus for anyone looking for a safe and secure life. Glendale also provides cultural resources for seniors. Without a doubt, a perfect city to invest in real estate!
3. Scottsdale, Arizona
If seniors are southwestern desert lovers, this is the place for them. Seniors can enjoy a great hike or perfect relaxing walks at night. Many seniors choose this city for its fresh air and healthy living. Scottsdale has become a more prominent place to invest in real estate.
4. Franklin, Tennessee
Franklin is a perfect city to retire. Not only is it beautiful, but it also provides an annual celebration for retirees. It is a city that is filled with historical background. The city has an admirably low crime rate and no state income tax. This city should definitely be on your list to invest in!
Related: Why Nashville Investment Properties Are Hot
5. Arlington, Virginia
Arlington tops everything a senior would want. It offers the conveniences and culture of a big city along with a small-town vibe. Friendly people and financial stability. Great health-care along with many outdoor attractions. This city has it all. Arlington also provides big returns for investors. It’s a winner!
Check Mashvisor for the best places to invest in real estate. Find investment properties that meet your criteria and give you the returns you’re looking for.