Why learn how to become a real estate investor after retiring?
If you’re looking for a means to make passive income after retiring, real estate investing is a great way to do just that. It requires hard work, yes. But it is work that pays off in the long run and one that will help you achieve a comfortable retirement. Investing in real estate will allow you to enjoy property appreciation, leverage, control over your business, and reduced taxes, among other perks. Additionally, it’s considered a ‘hedge against inflation’ which means that it’s essentially a safe investment option for when you’ve retired.
“But how do I do it?”, you’re asking.
Check out our 5 tips on how to become a real estate investor after retiring for ways to start investing.
How to become a real estate investor: Tip #1 Plan as early as you can
It’s never too soon to start planning for retirement. It’s something we’re all going to have to do at one point or another in our lives, so we might as well start planning for it, right?
When do you plan to retire? This will help you decide when and how you should start planning. You’re going to want to start small at first, and work from there to own multiple investment housing units that will help you retire comfortably. One thing is for sure: you always want positive cash flow.
How much do you want to be making per year? Let’s say you’re planning of banking $60,000 per year. This means that you have to make $5,000 cash flow per month. Next, you should ask yourself how many units you need to make those $5,000, and how much money you’d be making off of each unit per month after all costs and expenses are deducted and adjust the numbers as you see fit. Make sure to consider different costs like rental renovations, utilities, insurance, etc. Once you have those figures defined, it’s much easier for you to lay out a timeline with goals that you want to achieve to be able to retire by investing in real estate.
How to become a real estate investor: Tip #2 Figure out a financing method
This is a no brainer. How will you finance your investments by the time you’re retired? Think about ways to save money to make money in real estate. Consider starting a savings account, and start wiring money slowly into that in the years prior to your investment so that you’re ready when the time comes.
Are you currently putting income away? Are you budgeting? Will you borrow money from the bank? All of these questions are ones that complement the planning stage above, because you can’t plan for investment without financing your investment. This complements the planning stage.
How to become a real estate investor: Tip #3 Find a great market
“Have you chosen a location yet? Where will you be retiring? Are you willing to move?” are all questions you should be asking yourself when you’re thinking about how to become a real estate investor after retiring. You should acquaint yourself with the best markets to invest in and which cities to avoid. After all, location is key when it comes to real estate investing. Know where to look, and make sure to use Mashvisor’s investment analytical tools. Mashvisor can help you calculate different real estate indicators such as CoC return, cap rate, occupancy rate, rental income, NOI, and ROI. This will also help you avoid using spreadsheets and will help you make the most out of your investment.
How to become a real estate investor: Tip #4 Consider Airbnb
Airbnb is a great real estate investment. Investing in Airbnb investment properties could mean more work because of the higher tenant turnover rate, but it may also help you bring in higher positive cash flow.
Memphis, Nashville, Las Vegas, Indianapolis, and Columbus are currently the hottest Airbnb markets in the nation. So, if you’re considering Airbnb investments for retirement, you know where to look. You may want to avoid New York City, San Francisco, Denver, Oakland, Atlanta, and Oklahoma City. These cities have been quite challenging in terms of short-term rental investment.
This is to say that some cities are better Airbnb than traditional investments. How do you tell them apart? Say you’re considering Nashville investment properties. Plug Nashville into Mashvisor’s search engine to get all sorts of data that will help you figure out whether it’s better to invest in Airbnb rental or traditional rentals.
How to become a real estate investor: Tip #5 Realize the risks
As with any other investment, real estate bears its own risks. You could, for example, have high occupancy rates, have bad tenants, buy a property that doesn’t bring in the expected cash flow, have really high expenses associated with your property, experience real estate market failure, etc.
In the end, what investment bears zero risk? None. But real estate bears the least, so go ahead and start investing. And Happy Retirement!