Every real estate investor and landlord is tapping into the millennial tenant pool. But what about Baby Boomers and retirees? Have you considered buying an investment property in the best places to retire?
There are two aspects to this thought that make it a great investment strategy:
- The type of tenants you’ll be dealing with
- The location i.e. the best places to retire
Retirees as Tenants
The reason retirees remain an unexplored investment opportunity is that we assume most people belonging to this age group own their own homes. According to a study from the Joint Center for Housing Studies of Harvard University, however, there was an 84% increase in the number of renters over the age of 60 in the US in 2016. These numbers are likely to continue to rise for this age group due to the following real estate market trends:
- The competitive state of the US seller’s market
- Rising property prices
- Increasing investment property mortgage rates
Combine all of that with the fact that retirees have the luxury to choose where they live and many of them don’t want mortgages and housing costs to tie them down. So they opt to downsize and move into rental properties in the best places to retire.
But Do They Make Good Tenants for Income Properties?
Short Answer: Yes
We’ve all heard (or maybe even experienced) the horror stories of bad tenants. They trash rental properties and can easily increase the expenses of investment property management. It’s unlikely that any of these stories revolve around retiree tenants. That’s because, for the most part, retirees can make for the ideal tenant.
You Won’t Have to Worry About Rent Payments
Two things landlords love about the average retiree:
- They’re more responsible than younger tenants
- Retirees tend to have a steady income and savings set aside
Dealing with late rent payments or the dreaded eviction process is not likely to happen if you’re buying an investment property aimed at attracting retirees.
Damage to Rental Property Is Reduced/Non-Existent
Again, tenants of this kind tend to be responsible. This means the chances of finding major damages to your rental property are lowered. Of course, as a responsible real estate investor, you should still have regular inspections according to the lease agreement. But because retirees see rental properties as a home and not just temporary housing until they buy, you’re not likely to face any issues in regard to this.
What Turnover Costs?
Part of buying an investment property is calculating vacancy and turnover costs. From marketing and advertising to screening costs to preparing the property for new tenants, it adds up when you invest in an area where turnover is higher. In the best places to retire, however, the tenants you attract are less likely to move out. Retirees choose a location and a place to live and typically stick with it. Save on rental expenses and this hassle of property management all together as long as you keep your tenants happy!
It seems that buying an investment property with the intention of seeking out retirees as tenants is a great idea. Let’s take a look at why the locations where retirees flock to make for great real estate markets.
The Best Places to Retire= Best Places to Buy Rental Property
Forbes named 25 US cities as the best places to retire for 2018. While retirees’ needs were a big factor that was taken into consideration (affordability, healthcare, etc.), a lot of what qualified these cities as the best places to retire also lands them the title of the best places to buy an investment property.
Affordable Investment Properties
The list for the best places to retire was compiled with the idea of finding places where retirees will want to live and be able to afford to buy property. As we saw, however, more and more of this age group is renting for one reason or another. So a good way to look at this list is as having some of the best places to invest in real estate for affordable properties.
Find even cheaper properties for sale in any of the markets below using this tool.
Favorable Economic Conditions
The economy was another factor that this analysis took into consideration. The cities chosen all showed positive trends for things like the unemployment rate and other factors that affect real estate values.
Quality of Life
Finally, tenants have to want to live in a city for it to be considered one of the best places to invest in real estate. This helps increase the demand for rental property. The cities on the list were analyzed for cost of living, crime rates, accessible transportation, walk score, and healthcare. With these traits, the cities also happened to be places filled with beautiful scenic neighborhoods and lively cultural hubs. The combination of these things can only add to the success of a real estate market.
Top 5 Best Places to Retire for Buying an Investment Property
Forbes put together the list of 25 and Mashvisor has narrowed it down to 5 places to invest in real estate. Knowing that things like the economy and demand for rental property from retirees support real estate in these cities, we used our investment property calculator to find the places with good ROI for long term rentals. That way you can be sure buying an investment property in one of the best places to retire will make you money.
The Villages, FL
Median Property Price: $280,382
Traditional Rental Income: $1,724
Traditional Cash on Cash Return: 3.22%
Days on Market: 75
Median Property Price: $342,109
Traditional Rental Income: $1,938
Traditional Cash on Cash Return: 2.51%
Days on Market: 92
Median Property Price: $201,119
Traditional Rental Income: $1,060
Traditional Cash on Cash Return: 2.19%
Days on Market: 94
Median Property Price: $227,271
Traditional Rental Income: $1,335
Traditional Cash on Cash Return: 2.17%
Days on Market: 81
Median Property Price: $290,114
Traditional Rental Income: $1,259
Traditional Cash on Cash Return: 1.8%
Days on Market: 90
Start looking for the best investment properties in the city of your choice here.
Want to see real estate data for the other 20 cities on Forbes’ list? You can get it here with a 14-day trial to Mashvisor and enjoy a 20% discount after!
Investing in real estate in the best places to retire can be a great strategy to make you money. Retirees are a special kind of tenant, so you will have to take extra care when considering things like accessibility and safety of your investment property. Still, choose any of the cities listed here and analyze them thoroughly with Mashvisor- it’s a winning combination for sure!
Did you know retirees often settle down in college towns? Read “College Towns: The Best Places to Buy a Rental Property” to learn more.