Your home is definitely your most prized possession. It’s the place where you make memories with your family and watch your kids grow up. It’s the place that feels big and filled no matter how small its size may be. However, for many seniors, when their retirement days are just around the corner and their kids have moved out, that once upon a time full house can feel like a burden on them. Why? Well, for one thing, maintenance remains expensive and they are just paying for heating and cooling empty rooms. This can cause them to waste both their time and money.
When retirees reach this stage of their lives, downsizing becomes the best option for them. They can live in a property that fits their needs and financial situation. As for real estate investors, chasing retirees is without a doubt a smart investment decision. Retirees make for the best tenants for many reasons which we will discuss in a bit. The key to succeeding with this investment strategy is finding the best places to buy an investment property to rent out to retirees.
Ask yourself what locations attract retirees? What common factors do such locations share? And how can you as an investor make money in real estate from such an important group?
Related: Best Places to Invest in Real Estate: Understand and Follow Retirees
Why retirees are the best tenants for investment properties
1. Retirees have MONEY
It’s true that seniors have stopped working, but that does not mean they don’t have money. They’ve had many years to work and save up money to spend during their retired years. Their main focus now, after years of hard work, is to just relax and enjoy what remains from their lives. This means that retirees could possibly go for slightly more pricey rental properties since they don’t plan on saving up their money.
2. Retirees have a stable source of income
Having a tenant with a stable source of income is very important. Most retirees receive a monthly retirement payment which is guaranteed. This source of income allows them to pay rent on time and for you, this means a reliable source of rental income from your investment property.
3. Retirees have a low tenant turnover rate
The number one thing that every landlord hates to face is having a vacant property. With retirees, you won’t have to worry about that since they are not likely to move out of the property. The move rate for seniors is only about 5% which means that the majority of the time your property will have a high occupancy rate.
4. Retirees cause less damage to your rental property
Seniors, in general, are quiet and attentive people. They are far less likely to damage your property. Having a damaged rental property means that you need to put in extra costs for repairs, so imagine how much you will be saving when you rent out your property to retirees.
Why renting makes more sense for retirees than buying
You might be asking yourself what’s the better option for retirees: buying and owning a home or renting? For retirees, they’re not looking for a property for a sense of stability. They don’t want to stay in one place forever which is why the majority choose to rent. Maybe they want to move in accordance with their kids and grandchildren so they don’t want a property to hold them down.
When buying a home, the rule typically followed is: If you’re not completely sure you will be in the same location for more than five years, then Don’t BUY! Plus renting is much cheaper for retirees than buying a property.
What does this mean for real estate investors?
Real estate investors are always on the search for the best places to buy investment property. By following retirees and targeting this group, you are able to generate a profit and high return on investment. Buying an investment property in a location that attracts retirees can be your gateway to making money in real estate.
Related: What Is a Good Return on Real Estate Investment?
This brings us to our next point: What factors make a certain location attractive for retirees? What do retirees look for in a location? Let’s find out.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
The cost of living
The best places to buy an investment property to rent out to retirees should have a low cost of living. Elderly people spent more than 60 years of their life spending money, paying bills and keeping up with family expenses. The last thing they want is to live in a place where the cost of living is high. They want to sit back, relax and enjoy a simple lifestyle.
Health-care and personal well-being of seniors
Seniors want a place that takes their well-being into consideration and provides them with the necessary care they need. When searching for the best places to buy investment properties for retirees, make sure that the location is close to hospitals, doctors, and health-care facilities. Also, check to see if the area is safe and suitable for seniors. Does it have a high crime rate? Is it so close to the noisy city center that they will suffer from sleepless nights?
The liveliness of the local cultural scene
Just because retirees are not young and hip does not mean that they want to live in an area that lacks life and spirit. Retirees are more attracted to locations that have cultural diversification and a variety of activities. The best places to buy an investment property for retirees would be ones that have beautiful parks and gardens and areas that are out of their ordinary routine. Change can be good for every soul!
We were able to identify the best places to buy an investment property to rent out to retirees using Mashvisor’s rental property calculator. This is one of our many real estate investment tools that help real estate investors find and analyze the best locations all over the US housing market.
Related: Mashvisor: The Best Rental Property Calculator You Could Ask For
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The best places to buy an investment property to rent out to retirees: San Antonio, TX
San Antonio offers big-city amenities and many attractions combined with a relaxed and inviting atmosphere to live in. The reasons that so many seniors choose San Antonio are attributed to the city’s warm climate and reasonable cost of living. The city values neighborliness and has a reputation for being family-friendly.
San Antonio, TX real estate market: City Stats
- Median Home Price: $293,510
- Traditional Rental Income: $1,551
- Traditional Cash on Cash Return: 0.94%
- Airbnb Rental Income: $2,294
- Airbnb Cash on Cash Return: 2.84%
- Airbnb Occupancy Rate: 44.39%
The best places to buy an investment property to rent out to retirees: Pittsburg, PA
In this city, the cost of living is 12% below the national average. Pittsburg is a great city for successful aging due to its high number of doctors and healthcare facilities. The city has good ratings for bicycling, walkability and volunteerism. Plus in Pittsburg, there is no state income tax on Social Security, pensions or retirement account withdrawals. This city is definitely one of the best places to buy an investment property to rent out to retirees!
Pittsburg, PA real estate market: City Stats
- Median Home Price: $263,713
- Traditional Rental Income: $1,200
- Traditional Cash on Cash Return: 1.7%
- Airbnb Rental Income: $2,042
- Airbnb Cash on Cash Return: 4.09%
- Airbnb Occupancy Rate: 53.39%
The best places to buy an investment property to rent out to retirees: Jacksonville, FL
The cost of living in Jacksonville is 8% below the national average. Other than its beautiful climate and warm weather, retirees prefer Jacksonville due to its high number of practicing physicians and good air quality. This city is less prone to hurricanes than most coastal Florida cities. Additionally, Jacksonville has no state income or estate/inheritance tax.
Jacksonville, FL real estate market: City Stats
- Median Home Price: $320,027
- Traditional Rental Income: $1,337
- Traditional Cash on Cash Return: 1.33%
- Airbnb Rental Income: $1,981
- Airbnb Cash on Cash Return: 2.32%
- Airbnb Occupancy Rate: 54.32%
Read Also: Best Places to Invest in Real Estate in 2018 in Jacksonville
The best places to buy an investment property to rent out to retirees: Madison, WI
Madison is another city that is characterized as one of the best cities for aging. The cost of living here is 9% below the national average. Madison has a very low crime rate and no state income tax on social security.
Madison, WI real estate market: City Stats
- Median Home Price: $339,864
- Traditional Rental Income: $1,490
- Traditional Cash on Cash Return: 0.77%
- Airbnb Rental Income: $3,087
- Airbnb Cash on Cash Return: 3.96%
- Airbnb Occupancy Rate: 50.39%
NOTE: Although the cash on cash return values listed above for each market are not ideal, you can click here and use Mashvisor’s Property Finder Tool to find investment properties with much higher returns.
The bottom line
Targeting the right group of people can really help investors succeed in real estate. Retirees are a great group to chase after. So whether you are an experienced or beginner real estate investor, you should definitely consider the option of renting out to retirees. They are simply the best investment property tenants a property owner could ask for!
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