By investing in single-family rental properties, early retirement is not only within reach but also might be as easy as falling off a log. If you have not considered the pros and cons of using real estate as one aspect of your retirement income strategy, you may fail to take advantage of the fast track to financial freedom.
Acquiring marketable properties in Gaithersburg and handling them correctly can surely turn out to be the most valuable section of a retirement plan. Real estate is an additional way to diversify an investment portfolio. This ensures that your entire retirement income is not chained to a volatile stock market.
Some of the wealthiest people in the United States became successful and financially independent through real estate investing. All the same, advances in technology and new business models have empowered even small investors to make use of the power of real estate investing for tangible financial freedom. Real estate normally offers more valuable annual returns than savings accounts or even 401k plans and is usually much more stable than stock and bonds. This indicates that by investing in Gaithersburg rental properties, you are expanding your investment dollars through different means that you may have not considered previously.
A first-rate rental property ought to pay for itself over the life of the mortgage. For as long as the rental payments are put to use to pay for part or all of the mortgage and other running costs, being the owner of a rental property costs an investor a negligible amount outside of the down payment in the long run. Additional rental income can be spent to replenish those funds or re-invested to grow a retirement fund even more. After the mortgage is fully paid, rental income can continue indefinitely. It is customary for rental rates to firmly grow by the year which would, in reality, create an income that keeps pace with inflation.
Meanwhile, well-maintained property is anticipated to continue to appreciate. This implies that should you decide to sell, the property should command a lump sum payment of more than the original purchase price. Assuming a 3.4% increase each year, a property would roughly double in value over 30 years, a sum that could then be converted into an annuity and provide an ongoing monthly income for another 30 years.
Ponder over this straightforward illustration: an investor buys a median-priced single-family home and puts 20% down. Monthly expenses would include average maintenance costs, insurance, property management fees, and property taxes. Monthly income would equal the market rental rate for the property. In today’s dollars, the monthly expenses and rental income from a carefully chosen rental property would balance each other out.
As rental rates go up the following year, the property would go from breaking even to positive cash flow, which would only increase in succeeding years. To this extent, rental property investment can indeed pay for itself over the life of the mortgage and then become the starting point of on-going retirement income.
To realize actual financial freedom, it is generally encouraged to procure and run more than just one rental property. For present-day rental property owners, there are other possibilities that you may use to leverage the equity in your existing rentals to do just that. Adding investment properties can help you retire earlier than you thought possible and, at the same time, increase your retirement income once you do. There are plenty of lenders out there who can be of service to real estate investors who are considering owning various rental properties. Many of these lenders offer outstanding services for investors of all sizes.
Over the long run, people are concerned about the amount of time and effort required to manage a rental property. But that is an outdated way of imagining how to invest in real estate. Nowadays, Gaithersburg rental property ownership can be hassle-free by hiring the best property management team available.
At Real Property Management Capital, we search out and screen tenants, handle collections and bookkeeping and take care of maintenance and repair requests. We also help maximize your rental income with market assessments and by setting accurate rental rates, ensuring your rental property remains profitable and in good condition for years to come. Contact us online or call us at 301-869-5001 if you have any questions.
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