The ideal types of investment properties for you are those that will see growth over the next 30 years as well as produce rents that will cover the mortgage and maintenance of the properties. These kinds of properties are located in areas with a strong local economy and workforce that is employed by numerous industries.
Even if you have a smaller initial investment, you still have significant buying power through the use of leverage. As the cash flow comes in via rent, use this income to purchase additional properties to build up your portfolio. By the time you retire, you will be able to amass a collection of properties that will be fully paid off and generate cash flow to fund your retirement lifestyle.
Since you have the luxury of time working in your favor, you have more flexibility when it comes to your risk tolerance. You should have a robust portfolio that includes assets with minimal risk to keep your portfolio stable as well as invest properties that are less conservative, but can have increased yields. The reason behind this strategy is that you have more time to build wealth and recover if there is an unpredictable turn in the economic climate. As you get closer to retirement, a more conservative approach should be made.
As you can see in this graph, the longer time horizon works in your favor. You have twenty or more years to gain the benefits of appreciation on your investments. By strategically investing with leverage, you are able to build equity and use the rent paid by your tenants to pay off your mortgages.
This means that by year 31, after the mortgages have been paid off, your initial investment of $84K has grown to be worth over $466K. And this value will continue to grow, as the investment properties continue to appreciate.
As your 30-year mortgage is paid off, your cash flow goes up dramatically, because you no longer have the cost of the mortgage dipping into your profits. Your portfolio of real estate assets will generate more than $39K annually, increasing as rents naturally go up.
Now is the time to act and utilize the one advantage you have that most investors do not – time. By adding real estate to your portfolio, you gain the benefits of being insulated from the stock market volatility and of reaching the retired lifestyle you planned on in the future.
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.