With a short-time horizon of ten years or less, retirement is just around the corner. You need to make the most of this time by growing and protecting your assets.
The investment properties you choose should be focused on producing solid cash flow now or in the near future. If you are a little closer to the 10-year horizon, your investments should also be in markets that will provide stable income and growth through appreciation.
While there are several different ways to fund investment properties, with a shorter timeline, it makes the most sense to pay for these properties in full with cash. This means that you’ll maximize your income immediately because the rent collected will go straight to your pocket, not to pay off a mortgage. This can be a great way to supplement or replace your income streams.
When you first entered the workforce, you were able to invest aggressively on investments that came with a higher risk but simultaneously had the potential for higher gains. With less than ten years to go until retirement, it is important to take a more conservative strategy and to choose investments that are as stable as possible while still providing you with the desired returns.
Much like you would choose a portfolio of stocks that are conservative for this time horizon, choosing real estate is quite similar. Instead of purchasing properties that are in risky neighborhoods with a potential for higher profits in the future, it is a better choice to purchase properties that are in stable neighborhoods with less risk.
As you can see in the graph above, your initial investment of $546K has grown to over $635K in just ten years. By investing in real estate, you own a tangible asset that is appreciating in value as the years go by. Your portfolio is diversified and typically safer going into retirement, which is an ideal place to be.
Since you purchased your investment properties in full, you maximize the cash flow generated through rents. You own these properties free and clear, and there is no mortgage to pay off. This means you carry less risk into your retirement, and profits are high. In fact, this real estate portfolio will generate an annual cash flow of over $48K at the ten-year mark, and that value will continue to increase in the future, as rent typically increases year over year.
Creating a Plan for your Investment Horizon Strategy
Now that you’ve realized your time horizon and the coinciding real estate strategy, it’s time to implement a plan. The key to successfully generate income in retirement through real estate investing is selecting the right markets, neighborhoods and properties that match your time horizon and investment goals. Every investor has a unique situation and set of goals, but creating a plan based on your time horizon can help you see your retirement goals realized.
HomeUnion can help. Our end-to-end solution makes it simple for investors to purchase single family real estate. We help you find, acquire, and manage investment properties, so you can invest in real estate hands-free.
How HomeUnion Works
1. MAKE THE DECISION
Be An Investor, Not a Landlord. Invest in single family rentals with HomeUnion.
2. DECIDE ON YOUR FINANCING
Is financing or cash best for your time horizon?
3. CHOOSE YOUR PROPERTIES
We will send you prevetted properties based on your personal investment goals.
4. ACQUIRE PROPERTIES
HomeUnion will do all the acquisition legwork for you, just approve the offers.
5. RELAX AS THE MONEY POURS IN
Watch the money roll in, as we take care of rehab, find good tenants, and fully manage your assets.