What was once perceived to be the golden years is under-threat from rising healthcare costs, the end of the pension program, and the deterioration of social security. Right now more elderly people are paying into the system that supports them than young people. Retirement is not what it once was.
Rental immovable property makes a lot of sense for seniors looking for a retirement option. It can provide a stable income flow, compensate for shortfalls in 401(k)s and pensions, while at the same time providing an appreciating asset that can be passed on to heritages.
And someone downsizing ahead of retirement could find their primary home a few years before selling as a source of revenue.
Real estate through channels such as for sale by owner has long provided a strong revenue source. According to a recent report, single-family rental homes in major U.S. cities produced an average return of 9 percent from the 1980s, making rental homes in those areas as lucrative as the stock market during that time. Rents also rose month by month in September in 54 of the largest 100 cities in the US.
Funding retirees of tomorrow Rental income as a safe option for retirement is not a new idea. By other steps in this country, there are as many residential real-estate investors as there are owners of Roth IRA.
A recent survey of 6,000 landlords revealed a disparity in older rental property ownership: less than 10 percent of landlords are of retirement age, which can be attributed to one problem: becoming a landlord can be hard work, and usually it is intended to be relatively handy and physical.
There is upkeep to think about. Looking for and managing tenants for your assets. Then you've got to supervise all the billing then finance. It's like running a small business and it's been a barrier that has long held potential owners out of the market, particularly seniors.
Today, the economy is moving to the tech-driven side hustle, even at retirement.
Life gets simpler for landlords every year, partially because the game is changing with technology. The baby boom generation's front end is deep into retirement, and many are relatively tech-savvy. And the success of sites such as VRBO, HomeAway, and even Airbnb has further stitched the idea of becoming a landlord in the everyday fabric of life for Americans of all ages, whether for a short or long term.
Here are only a few examples of what the modern rental industry technology is doing.
Simplifying the application process: Tenants are one of the toughest aspects of being a landlord with for sale by owner. Property marketing, identifying prospective clients, getting them through the application process, filtering them out, talking back and forth, and more. For every vacancy, landlords usually go through at least four applicants. Then a meeting comes in to sign the lease and hand over the keys. It takes a lot of time and needs a lot of preparation. Now there are technological solutions and applications, including those provided by Zillow and others, which can manage virtually all of this for the landlord, handling the whole thing with a button press.
Streamlining tenant management: The application and the move-in are of course just the beginning. There is constant contact back and forth about rent invoices, maintenance requirements, lawn care or general inspections if you have tenants. Perhaps in the middle of the night the air conditioner fails, and they need to contact you. A repair company can be alerted directly through tenant-management technology. Marketplaces of technology such as Angie's List have already made it easier for property managers to find contractors and these transactions are becoming even more automated.
Finance oversight: owning rental property is much like running a company, and the landlord will work through an annual fiscal period in which they have money coming in and going out all year round. They have to register with the IRS to stay on top of the entire financial side of the company which can become very overwhelming in addition to all the other obligations that they normally have around rental property. Software tools like QuickBooks and other apps like Wave Apps and other resources offered on for sale by owner will simplify all of this, bill tenants, balance books and make sure the IRS is covered.
All of this is shifting the dynamic between landlords and tenants, encouraging both sides of the deal to be more hands-off. This takes some of the pressure out of the leasing process – helping ensure tenants get their maintenance and service needs to be met in a timely manner.
This means that seniors, and other potential tenants, can handle owning rental property from a laptop or phone. And, it can provide a much-needed income source for those looking for a lucrative addition to their retirement portfolio without needing too much hands-on supervision or oversight.