Looking for a way to retire with real estate investing? It is not an overly easy task to develop investment strategies on the fly. The best investment strategies to retire with real estate are methodical and learned from experience. Real estate investors retire with the use of income properties all the time, but how do they do it? The best real estate investment strategies to secure your retirement begins with learning from others’ mistakes. Here you will find the 8 best investment strategies to use for an early retirement.
Reduce rental expenses
It is no secret that in order for an income property to thrive, it needs to be bringing in a regular rental income. The higher the rental income the better, which means you have to reduce your rental expenses. Investing in real estate for retirement means collecting as much of the rental income as possible. That is why it is smart to consider paying off the mortgage early when searching for the best investment strategies. It allows the property owner to have a higher steady rental income with lower risk of expenses when the unknown occurs. And anyone that has ever invested in income properties can inform you that there will be some costly unknowns.
Save for the unknowns
This brings us to the next strategy: reserve money for the said unknowns. No one can tell you exactly when they will happen, but they will appear at some point throughout the course of your real estate investment career. These unknowns are predictable in some cases, and not in other situations. In certain situations it can be that the roof needs work, the boiler needs changing, and simple things that can put a divot in the wallet. However, the biggest hindrance in an real estate investing is a vacant property. This is costly as you are guaranteed to have a negative cash flow for every month the rental property is vacant.
Save some more
Save money for the rainy days. Great real estate investment strategies will include a percentage of the maintenance and vacancies that are expected in the monthly rental income. For example, if the rental property is expected to be vacant for a month in the year and has a rental income of $1,200, $100 should be reserved each month for negative cash flow month. In ideal investment strategies, real estate investors will have 2 months of expenses hidden for a rainy day. This is of more value when investing in real estate for retirement.
Creative rental income
Real estate investment for retirement requires creativity and opportunity. The more ways a real estate investor can generate income, the better. That is why some of the best real estate investment strategies when dealing with investment properties is finding ways of increasing rental income. The simplest way is to be flexible to the tenants’ needs. Maybe it requires to allow tenants with pets live in the property with an added fee to the rental income. Maintaining the outside of the property can be tedious for tenants, so having a landscaping fee is another option. Investment strategies in real estate vary and have no limits. A real estate investor needs to find the best method that suits his/her preferences and needs best.
Line of credit
In addition to having a reserve fund for up to 2 months of expenses, it is also wise to have a line of credit for every income property that you own. Since the real estate investing market is so unpredictable, it is smart to have a quick source of money when need be. The best real estate investment strategies are the ones that require some forethought and expect the worst. A good motto to live by when investing in real estate for retirement is to hope for the best, but plan for the worst.
Stay on top of your rental property. Fix repairs as they come. This may sound contradicting to previous statements of collecting the most rental income, but it is not. The rental property is like any other position, stay on top of the minor maintenance issues, and they will not fester to bigger, costlier problems. This includes regular checks and tuneups to everyday equipment like the furnace or the air conditioner. These little things will ensure the longevity of the equipment, creating less costly issues later.
Do not become complacent. As previously mentioned, having a vacancy is a super costly expense. That is why the best real estate investment strategies include being proactive in finding the next tenant. This does not mean to settle for any tenant, but it does mean that in between vacancies, a real estate investor needs to be working hard and hustling. Investment strategies to limit vacancies include incentivizing the current tenant to find a replacement for a discount on his/her final months rent. It is better that the wallet takes a minor hit than baring the full monthly expenses for the vacant months.
The real estate business is the same as any other business. It requires good relationship building to make the business run smoother. A good landlord-tenant relationship can be the difference between limiting your turnover and having respectful good tenants. A great tenant will treat your income property as his/her own. This will limit the damages and maintenance that’s required. Plus, the tenant will feel more comfortable to approach you with every problem.
Real estate investment for retirement is a great goal to achieve; however, it takes preparation and a lot of planning to do so. The best real estate investment strategies for retirement are the ones that are methodical and prepare for the worst incomes. Once you enter the golden years, income properties will be your only source of income. That is why it is important to limit the unpredictability and have money ready for any unknown to come. Investing in real estate for retirement is not a strategy that is developed on the fly. The best way to learn how to do so is through experience. That is why we at Mashvisor are more than happy to share our knowledge and experiences. Visit Mashvisor for all your real estate needs!