Unfortunately, people tend to not think about how they want to retire until middle-age, or even later. This means that the time you have to prepare for owning rental property in retirement is drastically reduced.
The first thing you must do is take time to envision what your ideal retirement situation looks like. Where do you want to retire? What do you want to do with your time? What does living at that stage of your life look like? These questions will help you narrow down your choices so you can begin making a game plan for moving forward.
When should you start investing to make this vision come true? As with any type of investment, the best time to start was yesterday and the second-best time is right now.
Let’s look at the advantages of this:
- It is generally easier to qualify for a mortgage loan while you are still fully employed. No bank is going to turn you down based on your age. However, if your income has dropped off significantly because you are no longer working, they can turn you down for not having enough income to qualify. Clearly, if you are considering owning rental property in retirement, you need to have a plan before you actually retire.
- Another big advantage is that owning your retirement home years in advance can give you a chance to move in slowly and make repairs to the property as you go. A “fixer-upper” house can be a great investment because you can get it for less and you can then spend a few years slowly doing the work necessary to make it look just like you want it to. This will also give you time to make any accessibility adjustments to the property that you may need due to your health.
- If you focus on owning rental property in retirement ten years before you retire, that gives you ten years to pay down the mortgage before you leave your job. That puts you at least 1/3 of the way towards paying off the property (on average) while you still have your full income at your disposal. It also means that you have more disposable income on hand to handle unplanned expenses. Also, this helps you plan for your retirement ahead by being exactly sure of how much you will spend on your home during your twilight years.
- Finally, this property could make money for you. If you purchase it early (say ten years ahead of time) then you can use it as a rental property until you retire and are ready to move in. This gives you a passive income stream that can help you pay off the property before retirement arrives or gives you the ability to retire earlier.
Start thinking about owning rental property in retirement now. That way you can take advantage of several bonuses that can work to your benefit. This can make your retirement an easier and smoother transition for you.
If you are looking for affordable, but beautiful, retirement property to invest in, we invite you out to visit Diamondhead Resort, just minutes from Hot Springs, Arkansas. Find out more about our property by visiting our website: https://seediamondhead.com/