Global Advice Center

Investing in Real Estate: How Investment Properties Can Make You Money During Retirement

Posted on May 5, 2010 04:01:48 PM

Professionals and career-minded individuals spend a lot of time and energy making money to save up for retirement, but few come up with a solid plan for making money during retirement. Because they’re so goal-based, their mindset is often set on retiring as soon as possible by making wise investing choices leading up to retirement.

But in concentrating merely on saving quickly for retirement, these driven people often overlook the opportunities that existing for making money during retirement itself. On the other hand, planning to continue making money during retirement is something that successful entrepreneurs excel at, because for them earning money is a personal lifestyle choice as much as a financial decision.

But you don’t have to be a really inventive or high-minded entrepreneur to make money during retirement. You don’t have to be tech-savvy or own a business already. You don’t even have to be extremely financially well-off (though to be safe, you should of course be financially stable).

What you do need is the drive to make money, and the willingness to turn to property investment as the avenue through which to do it.

Investment properties are a great way to make money during retirement because they offer two main avenues through which to earn, neither of which requires a huge time commitment from you, the owner. This means that you’ll be able to collect profits from your properties without having to give up on the whole point of retirement: enjoying life and doing the things you’ve always wanted to.

The first way to make money through investing in real estate is through renting the properties to tenants (usually private residents, but occasionally companies, as in the case of commercial real estate). You make money from the monthly rental prices you charge, though a common guideline for pricing your rental fees is to charge just enough to break even on your mortgage, taxes, and maintenance on the property.

The second way to make money from investment properties is in the
appreciating market value of the property itself. In other words, while your renters are taking care of all your ownership costs of the property, the property’s value is growing. You can sit back and wait for the property value to climb during your retirement, then sell it for a monetary boost to support those unfulfilled retirement wishes.

Alternatively, you could keep the investment real estate for a longer time-frame, giving your tenants the chance to fully pay off your mortgage–and after that, their rental fees become mostly profit for you. Another benefit of this “hold it forever” strategy is that you’ll then be able to pass your real estate investments along to your family; a young-adult grandchild could benefit tremendously from such an opportunity.

Either strategy can be highly effective, however, and if you’re interested in
making the most of your retirement you should strongly consider investing in real estate. You’ll be glad to have an additional income stream while you’re living out your golden years.