Real estate is a great investment. Property typically appreciates in value over time, the only costs incurred are repairs and maintenance. It’s not as simple as buying and selling property or renting it out, though. Poor choices can lead to losses. With the right information and understanding of the market, however, it can be a great source of income while working at another job, or after retirement. In fact, retirees can really benefit from the income generated, which can be used to invest in another business, or for personal comfort.
There are a number of advantages to investing in real estate as retirement income:
There are possible negatives to keep in mind as well:
While you should consider these risks, investing in real estate is still very viable if the risks are properly managed. The problem of units remaining empty can be avoided by choosing an ideal location for the intended property, commercial or residential. Adding in extras like a swimming pool for residents, high security measures (like electronic entry and exit, or secure parking), and making the most of views, can make tenants opt for your building rather than another one right next door.
The risk of untrustworthy tenants can be contained by doing background checks. The law allows such checks, within reason. This will reveal if a renter has a record or if they are in default on rent or a loan. Private investigators can also conduct such checks, for a price. The costs of repair and maintenance can be mitigated by having a rental agreement that contains clauses making renters culpable for damages they cause. Other repairs like a leaking faucet, painting, and broken tiles don’t cost much and can be fixed easily.
Finding renters quickly is a problem that can be assuaged by keeping funds in reserve in anticipation of a time when a unit will be empty. Renters are required to give notice before moving, and that time period can be used to re-organize finances before another occupant moves in.
Jacksonville is one city in Florida where property owners are seeing good returns. According to Rent Jungle, the average apartment rent rates have increased by $31 or 7% over the last 6 months. The average rent on one-bedroom apartments has gone up by 9% and for two-bedroom apartments by 10%. Property investors in the area are collecting rent and are laughing all the way to the bank, and to a larger retirement fund!
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