It’s no secret that real estate can make a good retirement investment. Many people have built a secure and prosperous lifestyle through owning several real estate properties, renting them, and ever re-selling them further down the line. While you may be tempted to dive headfirst into this exciting venture, it’s essential to approach this with knowledge, skill, intuition, and bravery. With a significant amount of research and care, investing in Franklin real estate can safeguard a lavish and comfortable future for you and your loved ones.
Real estate is an asset with high returns, appreciating over time. According to Jeff Camarda, a real estate investor and CEO of Camarda Wealth Advisory Group, while real estate is an inefficient market, you can find excellent bargains with high returns on investment. In addition, Camarda says that if you can manage the property yourself, you can collect more income. A rental property can increase your income significantly more than traditional passive investments. Before delving into why buying Franklin, TN, real estate is a terrific idea, let’s touch base on different elements needed when investing in real estate for retirement income.
Investment money needed
If you plan to finance your Franklin real estate purchase with a mortgage, you’ll need to get your finances in order before you retire. Mortgage lenders typically require applicants to have two years plus of steady employment history in the same job. They also require a substantial downpayment, usually 30% or more, if the investor won’t be living on the property.
Consider recurring expenses
Once you’ve worked out how you’ll buy the property, you need to assess how you’ll cover recurring costs. Owning a residential income property is like owning a primary residence because there are variable expenses outside the mortgage, including minor repairs and major structural changes, such as new roofs, electrical, etc. Additionally, you must account for marketing costs and income loss during vacancy periods and tenant change-over.
Bolster your real estate knowledge
Real estate investment can become a profession, giving you endless free time to savor your retirement. To do this, you’ll need to boost your real estate knowledge. There are plenty of seminars on how to invest in real estate in addition to many books on the subject. Furthermore, working with an experienced real estate agent with positive client testimonials and sales can help you approach this venture with gumption and skill.
Now that you have a general idea of what is needed to begin investing in real estate, let’s look at the benefits you can garner from it. With an agent with extensive experience and Franklin real estate knowledge by your side and a deep desire for success, investing in real estate will yield a favorable outcome.
1. Generate a steady cash flow
If you reside in Franklin, purchasing a second home can help generate income for retirement. Buying a Franklin apartment and leasing it to tenants to collect monthly rent is an option. Alternatively, you can buy an entire apartment building and lease it to several tenants, though this requires more time and effort. Owning a rental property typically requires a large upfront investment, so this is an excellent option if you have a significant amount of capital saved to make a down payment. Note that you can use money from your self-directed IRA funds to invest in real estate, but there are certain requirements you’ll have to meet. It’s also worth noting that there are several ways to invest in real estate for retirement, leaving you with plenty of options — one of which is sure to suit your objective.
2. Excellent returns
If your property increases in value over time, you’ll be able to sell it for profit. Considering the median listing home price in Franklin, Tennessee, is trending up 24% year-over-year, you can look forward to significant profit when listing your Franklin home for sale. If you prefer to rent it out, you can earn monthly income while you wait for the property value to increase.
3. Passive income
One of the most significant benefits of owning an investment property is the ability to enjoy plenty of free time. Rent checks coming in each month are a form of passive income that will increase your quality of life effortlessly.
4. Safeguarding against inflation
Investing in real estate is a surefire way to protect yourself in the face of inflation. As the prices of services and goods rise, home values and rent prices typically increase with them. With an investment property, you will collect a rising monthly income that will protect you financially as the costs of everything else rises, too.
5. Diversification
Diversifying your investments can protect you in times of economic distress. It’s always a great idea to boost diversification to ensure you’re ready to meet life’s financial challenges. Even if other investments have fallen through, your investment properties may still increase in value, saving you from the effects of other investment losses.
6. The power of leverage
When you buy an investment property, chances are you won’t be able to pay for it in full. This is where leverage comes in. Leverage in real estate is when you use other people’s funds to purchase properties, such as loans you’ll pay back over time from banks, mortgage lenders, or credit unions.
7. Long-term security
Real estate is a long-term investment that you can hold for several years as it appreciates in value. Going back to what we discussed earlier, renting out your property can bring in monthly income while you wait for the property’s value to rise.
8. Tax benefits & liabilities
One of the primary benefits of owning rental property is the ability to claim a depreciation deduction on your federal income tax return. Depreciation reduces the value of your property each year due to weathering and damages, consequently lowering your tax bill each year that you claim it. Conversely, it also lowers your cost basis, meaning you’ll pay more taxes if you sell your Franklin property for a profit.
9. Gratification & control
Purchase a Franklin house for sale comes with additional benefits that aren’t financial. When you own investment real estate, you are your own boss, which can be extremely fulfilling and freeing.
If you’re looking for financial freedom and a way to savor your retirement, consider purchasing real estate in Franklin. Contact Debbie Gregory to assist you with finding properties and every aspect of the home buying process. Your leisurely retirement is calling!
