With the cost of living in today’s economy, Social Security Income may not be enough for a comfortable retirement. Contrarily, real estate is always in demand. Many retirees have turned to real estate to help supplement their income after retirement. Some people have been able to retire early due to their real estate investments. There are several ways that investing in real estate could help you thrive comfortably in your retirement.
Planning Retirement Funds
The retirement statistics in America show that many people are not prepared. The average person has a little over eighty-four thousand dollars saved at the time of retirement. About a third of Americans have less than five thousand dollars saved. Experts say that you should have at least one million dollars saved. Income restrictions prevent many people from being able to save for retirement.
Reasons to Consider Real Estate Investment
There are many reasons why a person chooses to invest in real estate as part of their retirement. Some people have money invested in stocks and use real estate as a back up plan in case the stock market crashes. Real estate produces a steady and predictable income. There are also several tax deductions for expenses for renovations, management fees, home office expenses, and even travel expenses.
Investment Methods
There are many ways you can invest in real estate such as purchasing land to flip, remodeling houses for sale, or acquiring income producing properties such as offices, apartments, or rental houses. Remember it takes years to make a profession, so if you are thinking about including real estate as part of your retirement plan, don’t wait until after you retire to make this decision. Research trends and speak with others who have made real estate as part of their retirement income.
Deciding What to Invest
There are several things you need to factor in when deciding how much you need to invest. The math for investing depends on the cash on cash returns. In investing, the cash on cash return is the ratio of annual before tax cash flow to the total amount of cash invested. The average annual income in Texas is fifty-nine thousand. If you wanted to have the same annual income after retirement, then you would need to invest five hundred and ninety thousand if there is a ten percent cash on cash return.
Dealing with Expenses
You also need to factor in taxes, maintenance, and future upgrades when deciding how much income you need. Rental houses will have the cost of routine maintenance and future upgrades. Apartment complexes will require the cost of maintenance and management. The point of retiring is to not have to work, so you won’t be handling all of these things yourself and will be hiring people for these jobs. You will also need to factor the cost of property taxes into your expected expenses.
Understanding Zoning Restrictions
Rental properties are always going to be in demand, especially in a college town like San Marcos, TX. If you are planning to rent out properties, you will need to research zoning restrictions. Some zoning restrictions don’t allow more than two unrelated people to live in a household, which makes renting to college students almost impossible in those zoning areas.
Planning Ahead
If you are considering investing in real estate, you need to do your research before you take the first step. Start before you retire because you don’t want to sink before you are able to swim. If done right, investing in real estate is a good way to have a comfortable retirement.
Interested in learning more about investing in San Marcos real estate? Contact The Damron Group REALTORS, a real estate agency in San Marcos, TX, for more information.
