As time marches on in this country, things change from the way they used to be. People change, businesses change, our culture changes, and our economy changes. No longer can we expect to work 40 years for the same company and be set up with a nice retirement package. With that in mind baby boomers and upcoming retirees are searching for ways to supplement their retirement incomes while still enjoying their time. One of the best ways to do this is through real estate investing. Not only is it a proven method for generating extra income, but it is one of the most rewarding industries to be a part of.
If you are considering real estate investing for a retirement future, here are some tips that can help you along the way.
1. Know Your Market
Investing locally is always a good idea, especially when you are first starting out. Being able to personally keep an eye on your property and be available when things go wrong (and they will) is a great way to learn the ropes. Many time investors are lured in by beach condo deals or super cheap properties in distressed areas like Detroit, etc. Unless you live in these areas, it’s best to start out local and learn the business.
2. Start Small
Even a one bedroom condo can bring in an extra $200 t0 $1000 per month in rental income, depending on where you are located. One bedroom condos are great for single people and tend to fill up faster than larger single family homes.
3. Invest in Relationships
Having a reliable partner that knows the market will do wonders for your business. I’m specifically talking about a real estate agent. A well connected agent that knows the area will be able to help you find some deals that might not otherwise be posted. When interviewing agents, let them know up front your plans to potentially buy several properties. This will move you to the top of the food chain so to speak.
4. Cash is King
Not only is cash king when it comes to buying the properties, but a nice cash reserve will be needed for renovations, repairs, unoccupied months, etc. If you can’t swing several months of the unit being empty then don’t invest.
Many people that want to get into real estate investing rush into it and buy the first thing they see. The key to this game is patience. Deals will come and go and if you wait for the right deal it will save you a world of problems. A good rule of thumb is to buy for 12 times the amount of annual rent. Sometimes you can find even a better deal, so don’t be in a hurry when it comes to investing. Do you homework and it will pay off in the future.
If you’d like to talk with a well connected agent in the Middle Tennessee area about real estate investing feel free to give our office a call at the number below.