After decades of hard work, retirement’s finally on the horizon. But don’t celebrate just yet. Remember that planning for retirement involves not only finding a place to settle down, but also securing a source of income that’ll fund your golden years.

If you think that your pension alone won’t be enough for your retirement years, it’s time to put your savings to work and rental properties can be a good source for a retirement income.

In this article, we’ll define what an investment real estate income is and what are some common, practical tips you can consider for retirement.

What you need to know about real estate income

A real estate income is the profit generated from your investment property, whether in the form of a rental income or payment for use of your industrial or commercial property or asset.

Your home’s value will generally increase over time. Some of the major factors that determine the value of real estate are: location, development, improvements and inflation. Although home appreciation varies by location, the average national appreciation rate in Canada is 6.11% per year.

Although some may think that entering the real estate industry involves large amounts of capital, that’s not always the case. Oftentimes, you just need some practical and technical knowledge, including getting the right mortgages to invest in your real estate venture. 

4 Practical Ways to Retire Using Real Estate Investments

Owning your own home can be a good investment, but it’s not the same as owning income properties, which have the potential to produce cash as income. Investment properties may increase in value — like your place of residence — but also can potentially generate a monthly income while you own them — unlike your home.

Here are some tried-and-tested ways you may use as you strategize your real estate investment portfolio for retirement.

1. Own a few properties and lease them out

Owning a few properties and earning a rental income can be a comfortable way to enjoy the returns on your investments.

Buying homes and having renters pay the mortgages for you over the next few years and leverage the rental income. You’d have a couple of rental properties by the end of the mortgage term and enough money to secure another mortgage and to increase your rental portfolio in the future.

2. Refinance and reinvest

If your rental income does not satisfy your financial needs, refinancing some of your property’s also an option. Refinancing will be able to reduce your mortgage payments, change the duration of the loan or move from a fixed-rate mortgage to an adjustable-rate mortgage or vice versa.

Afterwards, you can make use of some of the equity by reinvesting.

3. Invest more, generate more real estate income

Having fewer properties will generate less income, while vice versa, investing in more properties will provide you with a larger real estate income and simultaneously grow your real estate investment portfolio.

Before embarking on this strategy, bear in mind that owning and managing multiple investment properties may be a lot more challenging and thus will require more technical real estate education and advice from the professionals.

4. Move to low-risk investments

Dealing with the hassles of tenants, among other risks in real estate that you’ll come across, may demand more of your time that was supposedly for your retirement.

Selling off your properties at some point after you retire may give you the option to turn to safe and alternative investments that are more hands-off, such as stocks, bonds or private equities just to name a few. 

Moreover, once you decide to sell off your investment properties, you’ll be able to receive more cash from the sale of property if it doesn’t have a mortgage.

The choice is yours; but remember to seek professional advice.

Start Planning Today

Because it’s about your real estate investment portfolio, thinking long-term is key when planning for your retirement. Being equipped with essential knowledge about real estate investing is a great start to embark on your portfolio.

Start to plan for retirement by contacting Daisy Raouph today. Based just outside the Greater Toronto Area (GTA), Daisy’s an experienced mortgage broker and financial security advisor who can support you in getting an investment property in preparation for your retirement. Consult with her today!

Get started with Daisy Raouph today