It doesn’t matter if you’re in you’re 50’s, 60’s, 70’s or even later in life, investing in Houston Texas rental properties is a smart investment because over the last 20 years real estate has been one of the best performing assets and that’s not expected to change anytime soon.
Although many people think that the time to invest in real estate is when you are in your 20’s, the reality is that real estate should be something that people invest in at any stage of their lives.
5 Smart Ways to Start Investing in Rentals Later in Life
Leverage (and build!) your network.
Think that 23-year-old rascal has a network like yours? Forget about it.
Take advantage of your superior network and double down on building an even stronger one.
Who do you know in the real estate industry? In the mortgage industry? In the construction and contracting industries?
Who do you know who has more money than they know what to do with and is looking for a project to invest in?
The electrician in your Friday poker group can refer you to trustworthy and affordable general contractors and handymen. The real estate agent in your bridge club may not service the area where you’re looking to invest, but she can refer you to someone who can.
Start assembling your dream team. After all, real estate investing is a team sport, and you have several more decades’ worth of contacts to draw on to fill out your roster!
Capitalize on your existing capital.
After being employed for several decades, you should have far more money set aside than some 23-year-old just out of college who’s scraping by on their entry-level income.
That extra capital is a competitive advantage!
Maybe you can afford to make cash offers to drive a harder negotiation and avoid financing fees. Or maybe you can afford a higher down payment to avoid mortgage insurance and having to resort to tricks like owner-occupied financing or relying on seller concessions for closing costs.
You may decide that you want to finance your rentals even though you can afford to buy in cash for tax or leverage reasons. But having more money at your disposal is a huge advantage over the young punks out there.
Use it to your advantage to negotiate hard, get the best possible financing, and move faster on deals than your competitors can.
Take another look at house hacking.
“Forget it, Brian! I don’t want to live in some trashy duplex!”
First of all, there are plenty of upscale multifamily dwellings out there. Don’t discount them just because your experiences with properties have been less than thrilling.
First, you could buy a home with an in-law suite and convert it to an income suite.e garage? In the basement? Something with a separate entrance of course, so you don’t have to mingle with the riffraff.
If you have a large garage space, could you rent it out as storage space?
4. Keep your eyes on the prize: income for retirement.
People invest in real estate for many reasons and in many ways.
As an older adult, consider putting “passive income” at the top of your priority list.
One of the things I love the most about rental investing is you can forecast your returns incredibly accurately, before ever putting a single dollar down as a deposit. You know the market rent, the neighborhood vacancy rate, the local property management costs, property taxes, insurance. You can accurately forecast CapEx and repair costs.
You’ll know exactly what kind of cash flow you can expect from a property before making an offer. This means you can only invest in properties with strong cash flow.
Appreciation may or may not happen sometime in the indefinite future. But cash flow isn’t based on future hopes and prayers.
Rental properties can be incredibly efficient income producers for retirement. The 4% Rule doesn’t apply; in fact, the whole notion of “safe withdrawal rate” goes out the window.
You don’t have to sell off any assets for the income produced by rentals. In fact, they produce more income over time, not less—rents go up, even as your mortgage payment holds steady (and eventually disappears)!
5. Snowball your extra income.
As an older adult, you’ve been at this whole “budgeting” thing for a while now. Granted, that could mean that you’re stuck in your ways—or it could mean you’ve learned a thing or two.
When young people get a promotion, the first thing they do is go out and find a way to spend their higher income. It could mean a better apartment, a better car, or just going out to more bars and restaurants.
It’s called lifestyle inflation, and it’s insidious.
As an older adult, hopefully by now you’ve witnessed firsthand how counterproductive lifestyle inflation is. Credit card debt? You’ve been there and done that. Faster cars? Not as sexy as they were when you were 20.
So, when you buy a rental property and start earning that extra $200, $300, $500 a month, what are you going to do with it?
Set it aside and put it in the stock market. Or in private notes. Or best of all, in more rental properties.
Because ultimately, you’re on a mission. Your mission, whether you choose to accept it or not, is to retire with more wealth, because more wealth brings more options. As you build streams of rental income, you can retire young, or keep working and building more wealth.
And when you retire, you can go travel the world if you want, rather than ducking into the Golden Corral before the Early Bird Special ends.
It’s never too late to start buying rental properties. If you invest strategically, you can accelerate your retirement saving, bend the 4% Rule and build a stable and permanent base of passive income.
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