There are many investments out there that can help you build a nice retirement fund, but few can keep paying you as handsomely as an income-producing property. Once the property has been paid off, you only have maintenance and other property management expenses to think about. You’ll have a nice rental income to augment your other retirement funds. Here are some tips for buying an income-producing property that can help you achieve the best outcome.
- Calculate return on investment (ROI)- While the purchase price is important as you do not want to pay an excessive amount for a property, your main focus should be the return on your investment. Would you rather have a $50,000 property priced right with a $400/month net rental income or a $500,000 property priced a bit high with a $10,000/month net rental income? The first one would take more than ten years to pay off, whereas the second would be paid off in a little over four years. Instead of having $4,800 of annual income for your retirement, you could have $120,000. Clearly, it is the ROI, not the purchase price that holds the most importance.
- Consider condition of the property- It is well and good to have to invest a bit in a fixer-upper if the numbers make sense to do so, but if it will take several thousand dollars and months to fix without raising the income enough to compensate, it isn’t much of a deal. Leaving months of income on the table doesn’t make sense either in many cases.
- Leave the property management to professionals- Managing an income-producing property is hard work, especially if you have never done it. The more properties you add to your portfolio, the more it will feel like a full-time job. Letting professionals handle the day-to-day work can definitely be a wise move.
At TriStone Group, we can help you every step of the way, including locating an income-producing property, making renovations, dealing with maintenance issues, and handling all the property management services for your entire portfolio of properties. Let us do the work, so you can sit back and watch your retirement account grow