There are many diverse ways to save for your retirement. Each carries varying degrees of risk, and the rate of return you can think of also varies widely. For investors looking for a way to grow their retirement fund immediately without the high risk of the stock market, the Richmond rental real estate market extends the best of both worlds. Over the last two decades, investors are gradually getting back to rental real estate to gain these benefits. Real estate investments may have an effect on your retirement otherwise dependent on how close you are to retirement age and your financial goals. In what follows, we’ll take a closer look at how investing in rental real estate can potentially affect your plans.
One of the very first things that new rental real estate investors think of when starting in property ownership is rental income. Investing in real estate is often viewed as a long-term investment strategy because the longer you hold and rent a property, the more likely those rental payments will help you build a lot of equity over time. Even short-term ownership can present the value of a monthly rental income that covers all of the expenses of owning and managing your property if your calculations are correct. While many investors may plan to sell their investment properties when they retire, it is unnecessary. If you set things up properly, you could use that monthly rental income to help support you in your retirement years.
High Potential Return
One more way to build your retirement fund is to purchase one or more bargain properties to rent and, ultimately, to sell. It’s common sense that the less you pay for the property upfront, the higher your potential returns will be months and even years down the road. The demand for rental homes is likely to remain strong for the foreseeable future, making rental real estate one of the safest and highest-earning investments around. And, if your investment doesn’t live up to your expectations for some reason, it is usually possible to sell and recoup your initial investment plus benefit from any appreciation that has taken place in the market.
Unlike cash, bonds, and other passive investments, rental real estate inevitably adjusts for inflation. What this means is that the value of the property you bought five, ten, or even twenty years ago will grow right alongside the rising cost of everything else. Few other investments with a high degree of stability offer this distinct advantage. As rental rates and your property values increase, your mortgage payment and other costs will remain the same, increasing your profit margin every year. The longer you hold your investment property, the higher your profits are likely to be. This can help you build real wealth to enjoy in your retirement years in a remarkably short amount of time.
Avoid the Downsides
One of the big reasons that more people don’t invest in rental real estate as part of their retirement plan is that owning a rental house can be a hassle unless you go about it the right way. Many people buy their first investment property thinking they can keep more money in their pocket if they manage it themselves. But many new Richmond landlords underestimate just how hands-on owning rental real estate can be. Unlike buying stocks or bonds, rental real estate is not a truly passive investment. No matter how long you own your properties, there will always be ongoing maintenance and tenant relations to manage.
One of the best ways to invest in rental real estate for retirement is to hire a respected name in rental property management to avoid potential drawbacks. At Real Property Management Richmond Metro, we work with rental property investors to ensure that your property is as profitable as it can be every single month, and we also help you increase your property values and meet your retirement goals. To learn more about what we have to offer rental property investors like you, call us at 804-417-7005 today!
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.