Florida is no stranger to people moving to the Sunshine state for retirement. Retirees enjoy the warm weather and easy access to multiple beaches. Some of those retirees also are looking for a way to generate retirement income and buying a commercial or rental property is one way to do that.
Some retirees opt to buy a single-family home as a rental property while others want to own a multi-family duplex or apartment complex. Whatever type of property a real estate investor chooses, it offers these advantages for retirement funding:
- Investment diversification. Adding a real estate property or multiple properties to your investment portfolio lets you spread the risk of your retirement investments further. You are not solely relying on stocks and bonds to fund retirement living.
- Income generation. If you are careful and pick a rental property with a good history of attracting tenants, or rehab a property to entice quality tenants, you will have a steady income of rent payments to help fund retirement. However, keep in mind that properties come with mortgage, tax, utility and maintenance costs too.
- Returns on investment. Most often, real estate appreciates in time and eventually can be sold when you want to cash in on its value. For example, according to U.S. Census Bureau data, in early 2018, the median price of a single-family home rose to about $316,000, up more than $100,000 from in early 2009. That increase also overcame the mortgage meltdown that was part of the Great Recession.
- Tax advantages. Consult a tax advisor for your situation, but often real estate investors can write off many ownership-related expenses, such as property improvements, reducing their tax burden. And the 2018 Tax Cuts and Jobs Act allows real estate investors to claim a 100% first-year depreciation deduction on some properties.
For those looking at early retirement or wanting to stretch their retirement dollars over several years, real estate investing can help achieve that goal. Working with a knowledgeable realtor and real estate attorney can help make sure you purchase a property that is a good investment for that purpose.