In today’s economy, it seems that everything old is new again … albeit with a bit of a twist. Years ago, it was common for older couples – and frequently widows – to rent out rooms for extra income. Offering a room to rent was a viable way to help supplement income.
Well, the idea is back, but with a bit of a twist. As Baby Boomers face the cold, hard facts of retirement, they are increasingly changing the definition of retirement to include at least some form of work. While you may not be ready to hang out a shingle on your front gate advertising, “Rooms for Rent,” you might consider becoming a landlord. In fact, the Wall Street Journal writes that it may be just the ticket, especially given the uncertain prospects for stocks and bonds and the meager interest rates on bank accounts.
Think about it. Here in Upstate New York it’s a buyer’s market now, so purchasing a multi-family home is more financially feasible than ever. And, the trend toward the renter’s lifestyle is starting to pick up steam. What does this mean to you? A low cost of entry into a market that is expected to expand. Starting to make investment sense?
Sure, it’s a career of sorts, but you also need to think of it as an investment. Weigh everything in the short term, including start-up and maintenance costs, as well as the marketability of the location you’re considering. But then also keep your long-term goals in mind, such as potential appreciation and eventual sale. Buying in a depressed market, after all, is only a steal if the real estate market bounces back. Finally, don’t overlook the possible danger of having all your eggs in one basket. This is especially true if you use the property as your primary residence since being a live-in landlord will unite your home, equity, and employment, into one potentially risky asset.
Like any retirement move, don’t make this one too quickly. Discuss your plans with a professional who can help you sort out the details, including how an investment rental property could affect your Social Security benefits. Also you should consider that this type of lifestyle may not suit you. In which case, you would be wise to explore other, more enjoyable options.
If you would like to discuss this more, feel free to contact my office for an appointment.