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A friend of mine is in his late 50s and is looking to retire in a couple years. He hasn't held a regular job in years, and has mostly supported himself via an eldercare consulting business and his rental income. Between him and his wife (early 60s, still working) they have five paid off rental properties netting them about $6,000/month, after property management expenses, taxes, etc, are taken out. As far as I know, he doesn't have much in the way of investments and the way, while working, is expected to retire soon. He's counting on this rental income to support him in retirement and his philosophy is that what counts is what's in your checking account every month.
Do you agree or know any retirees supporting themselves mostly with rental income? How did it work out?
We're retired and have a pair of town houses that are paid for and rented out. Works out very well.
We built them in 1985, lived in one side for years and then moved and rented both sides out. Paid for real estate is the mainstay of our retirement. The home we live in is paid for, too.
You have to understand, though, that the years before they are paid for is kind of a drudgery. But once you get the first one paid for, it all falls in place.
PS: I know a family that takes in 2500 (Two thousand, Five Hundred!) rent checks a month.
My 84-year-old mother became a widow at 44. She was left with my father's government pension, a paid off house, and worked part-time retail jobs for several years to help make ends meet. At the same time my father died in 1975, she was left with extra money that she needed to invest in order to avoid taxes. She decided to buy a rental and through the many years since bought several other rentals in Southern California. Now she just has one rental left that pays almost twice as much per month than her pension. Us Kids were considering selling the remaining house as she has Alzheimer's now, but we were advised to keep the house as its a good source of income for her.(and we avoid taxes for now). In my mom's case she was lucky that homes appreciated so much and brought her a good return.
My son received an inheritance and bought two rentals that needed cosmetic improvement which he was able to do himself. He was only 23, so he just told the renters that he managed the property for the owner. He is now 32, and it has worked out well. He definitely plans to use rentals as a part of his retirement.
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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as mentioned... income property comes at a cost (of freedom)
I prefer owning NNN leased commercial property, but internet erosion has cramped my tenants / returns and created a lot of vacancies in commercial properties. One friend has had a property 3000 miles away and he has never even gone to see it. He nets $7k/month and has a national tenant with 7 yr leases who pays months in advance. (rare in USA, but tenant is Japanese owned company, so they need to currency hedge / manage their leases in advance.)
One benefit of my income properties is that I keep them in regions I like to visit, so it is a tax deductible trip (within rules) to go and work on them. (which I do a lot...at the moment, 3 are currently under construction / remodel).
Another benefit is inflation hedge.
3rd benefit... I get ~ 7-10% ROI + potential equity gain (I buy low).
4th... as my 'pension'... it comes with survivor benefits (liquidate the properties, or keep them). The capital investment is secured by the properties.
In the 'end-game' (post age 70...) I plan to sell them on contract, likely to tenants (who are taking very good care of my properties).
Disadvantage... All mine are rural, so LOTS of maint / upkeep / septic / wells / barns / fences... Spring can mean a lot of WORK. Potential for equity gain is better as they are all 'view' properties.
but,,,
Real Estate is not a liquid asset. +/- (You can be STUCK with it a LONG time!)
We have 5 rental properties, mostly small older homes, one is our former house,
(we had this house built in 2005), and one is a triplex...it helps a great deal to have
this income line to add to SS.
We have 5 rental properties, mostly small older homes, one is our former house,
(we had this house built in 2005), and one is a triplex...it helps a great deal to have
this income line to add to SS.
If you were of average income, doesn't that rental income plus SS cover work income?
Excellent strategy if they can make it work, the properties are paid for and profitable, and they have a plan for managing properties if the owner can't do it. Bad strategy for expensive mortgages without a property management plan.
I think they should get a job and become productive members of society.
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