A wise real estate investor once told me that you cannot overpay for a rental property that will pay itself off in 20 years. The point is, you can buy a property now, with just a down payment, and have a tenant pay off your mortgage while you keep your own money along the way. It doesn’t really matter if you buy low or you buy high. What matters is that you will have a property that is paid off and becomes a forever annuity. You can either live in the property or use it to continue getting rental income.
This is a great retirement plan. You can purchase a home now in Sarasota, Bradenton or Lakewood Ranch, Florida with just a down payment. You can then retire down here in 20 years or so, and live in your debt-free home, which has been paid off by the tenants over the years. This is not a difficult concept, but there are important considerations and pitfalls to avoid along the way. Make sure you do it right.
First, consult with a professional property manager. An expert in the rental field can advise you on the best places to buy a home so you can keep it consistently rented. Your property manager can also help you predict how much rent you will be able to bring in from good tenants.
Getting a bad tenant will set your plans back. You don’t want to have the wrong person in the property. You also have to be proactive with the maintenance issues your home will require. Avoiding legal pitfalls is also important, and a good property manager can help you with these issues as well.
You don’t want to buy a beautiful home in a nice area and then have it abused by a less than desirable tenant. Someone needs to oversee the rental and make sure it’s being well cared for and properly maintained.
If you cannot afford the home you really want right now, but you still want to get into the market in this area, purchase a home of lesser value and rent it out. When you are ready to retire, you can sell that property and use the proceeds to buy the home that you really want to live in.
Please contact us at Sarasota Management and Leasing if you have any questions, or you want to further discuss how you can pay for your retirement home in sunny Florida.