Investment StrategiesCreating Rental Income for Retirement Income: A Complete Guide by John Goreham December 18, 2019December 4, 2019 by John Goreham December 18, 2019December 4, 2019The business of real estate rental property is often looked at as an active business. In many ways, that is the correct view. However, many savvy investors are looking at real estate rental property to generate rental income for retirement. This is known as passive income or passive real estate investing. The crux of the strategy is to develop a stable real estate portfolio to provide cash flow to be used as retirement income.Many of the same strategies for making money in real estate still apply. And Mashvisor is a key resource if building wealth from rental property income is your goal. As with all real estate investing, using rental income for retirement starts with buying property. Here is Mashvisor’s guide to earning income for retirement through rental property investment.Related: Real Estate: The Best Retirement Investment StrategyRetirement Income SourcesBefore we dive deeply into the topic of rental income for retirement, let’s look at retirement income sources. By definition, you are no longer working in a daily job. So where will your retirement income come from? There are generally three sources of retirement income.The first is social security. To have this retirement income stream, you must have worked for an employer who paid social security taxes on your behalf. Coupled with Medicare, many Americans use this as a secondary or primary income source in retirement. However, those who have only worked in real estate as an investor will not enjoy this benefit, since they have not worked for an employer who paid taxes.Next is an individual retirement account. This is money that you have saved yourself. In cases where you worked for an employer, they may have matched your savings to a small degree and the money will have some tax advantages. 401K plans are a popular form of IRA, but again, real estate investors don’t have 401Ks.Last, is the old-school pension. This form of retirement savings was replaced at most private companies by the 401K. However, those in the military (for more than 20 years), municipality workers, and teachers still enjoy pensions.Rental Income Retirement StrategyIs rental income good for retirement? When used in conjunction with the above revenue streams, retirement income from rental properties can be very helpful. Rental income for retirement will come from owning investment properties that you have already acquired and have “stabilized.”By this, we mean the major renovations are done and paid for. You have matured your real estate portfolio and sold off the bad eggs. What is left in your portfolio of properties is rental property for retirement income you can count on. These are investment properties that provide you with reliable cash flow. The tenants are those who are reliable and the neighborhoods, stable.Along these lines, those planning to use rental income for retirement should consider a property manager. The services do come at a cost. However, they lessen your need to be involved day to day. To avoid mistakes when hiring a property manager, check out Mashvisor’s guide: 6 Mistakes Investors Make When Selecting a Property Manager.Rental Property for Retirement IncomeNot every property is ideal for rental income for retirement. You do not want to be actively managing the investment properties on a daily basis. Rental properties for retirement should not necessarily be the big whoppers either. One property with large cash flow is unreliable in the event there is trouble. Your rental income for retirement needs to be stable on a month to month basis. For this reason, you should consider how many rental properties to retire on.Only you can answer this question when evaluating how much retirement income for retirement you will need. To find the answer, you need to first create a budget. Next, evaluate your non-rental property income streams. The difference between the amount you need and the amount from your traditional retirement income streams is your answer.Once you know how much retirement income from rental property you will need, you can work backward. Simply determine how many rental properties you need to retire. Buying multiple rental properties, rather than one large one, is a wise strategy. Avoiding property types that require your constant attention like Airbnb properties is also likely wise.Related: How to Buy Multiple Rental Properties in a Single YearRental Income for Retirement – End GameAnother aspect of using rental property in retirement is the plan for your business to transition or end. If you have enough assets to live comfortably until your last days, work with an attorney to set up a transition plan for your heirs. You should do this sooner rather than later. There are serious tax implications of leaving investment property behind without a plan.If you don’t have enough assets to keep your real estate portfolio until you pass, you should consider selling those with equity at strategic points in your retirement. Here again, it is wise to work with a tax attorney early on. Selling a property without buying another can incur capital gains taxes. Be sure you have a clear understanding of the after-tax value of your holdings. Once you do know the value of your property, plan to sell the individual properties as your leases end and as you grow older. This equity can become funds for your day to day needs just like the rental income was.Retire on Rental Income – When to StartThe age at which you plan to retire will help you to determine when to start your rental income for retirement planning. If you are a military veteran retiring at age 38 from your 20-year career, you have as much as a half-century ahead of you. By contrast, if you have worked in a nine to five job for an employer and are retiring at age 65, your timeline is very different. Any real estate investor will tell you to start as soon as possible. You have lessons to learn. Mistakes to make. Good and bad housing market conditions to navigate. Try to work through these important challenges before you are retired. This way, once you do begin using rental income for retirement, you will already know the ropes.Related: What Age Should You Start Investing in Real Estate?Mashvisor has all of the tools that you need in order to create a plan for rental properties for retirement income like our investment property cash flow calculator. Why not take a quick tutorial of the tools Mashvisor offers to those considering rental income for retirement? Start Your Investment Property Search! START FREE TRIAL Investment PortfolioMaking MoneyRental Income 0FacebookTwitterGoogle +PinterestLinkedin John GorehamJohn is a Content Writer at Mashvisor. He is also the owner of a rental property company who has used Mashvisor’s tools in the past to help with his business. John's background includes automotive writing. When he is not writing about cars or investing in rental properties, John enjoys fishing with his family. 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