Real estate is far too often excused before being given a fair shake by those looking for a supplemental source of retirement income. Yes, there are some down sides to owning rental property, but there can be some significant financial upsides as well, making real estate well worth ones while to at least consider.
One of the greatest misgivings of real estate as an option for a secondary source of retirement income, is capital cost. Of course, if your means simply cannot accommodate a down payment then investment real estate is probably not an option for you. However, if funds are available to secure a piece of rental property, don’t be so quick to rule this option out without first giving the idea fair consideration. Some of the worries often associated with owning a rental property are deadbeat tenants, property upkeep, and of course the unit being empty between tenants. All these are legitimate concerns but should not be viewed upon as deal breakers without first weighing them against the upside potential of real estate as a supplement to your retirement income.
Depending on the state of the market, the size of the investment and the type of investment property you are able to consider, a rental property can generate anywhere from $200 to $1000 per month or more of additional income. The best time to shop of course is in a depressed market that is ready to turn the corner. That’s not to say a good deal cannot be found in a robust market, you just have to work harder to find them. A depressed market also usually means lower interest rates can be secured on a fixed interest loan. Variable rate loans, although can often be secured at a much lower starting interest rate, are seen to carry too much long term risk.
According to Than Merrill, a real estate educator and owner of Fortunebuilders, “There are many tax benefits that come with owning and building a rental property. Most rental home expenses are tax deductible and if you save your receipts or document your transactions, …