Advice for Retirees

[SusanSanderson]

Hi everyone,

My husband and I are retired and in our 60´s. After reading Don Campbell´s book, we are now seriously considering entering into the Business of Real Estate Investment. We are in the process of setting up a re-advancing mortgage with an attached Home Equity Line of Credit that we intend to use strictly for investment purposes. It will give us about $70,000 to work with.

In this stage of our lives, monthly cashflow is important to us. Looking at the many strategies to make money by investing in real estate, what might be the best avenue to pursue? We have been looking at Rent-to-Own as a possibility, considering the great cashflow and short-term profits to be made. Would this be a good strategy for us, or is there something else that would be more suitable for retirees?

Thanks in advance for any advice you can share!

Susan

 

[invst4profit]

Not an answer to your question but:
At your point in life are you prepared for the ups and downs of investing in real estate.
Many new investors seriously underestimate the costs associated with income properties such as extended vacancies or evictions resulting in many months of lost income. Negative cash flow is a definite possibility.
My advice to novice investors is "if you can not afford to lose your investment you can not afford to invest".
Income properties can be a slow constant drain on resources which is why it is always recommended that when starting out the investor have a permanent, good paying job to support there new venture.
None of my business but I would hate to see anyone lose it all at or near retirement.

 

[hazed]

I may be bias here, but I think the Rent-to-own strategy is one of the safer, easiest to manage real estate investment strategies out there. There is a clear exit strategy, you are secured by maintaining ownership of the property, you get a non-refundable down payment, monthly cash flow and payment at the end of the term. You should have little or no landlord duties, no vacancy if all goes as planned, and you know what your selling price is at the end of the term. You also get better `tenants` who want to purchase the home and will do the repairs, maintenance and improvements themselves! Study the investment financials and know and understand your contracts or work with someone who does.

 

[GaryMcGowan]

If it is cash flow you are looking for then Rent to Own (Lease to Own) can provide that. The rent to investment can be a great fit for people in your situation. It is short term investing, 2-3 yrs with high cash flow. Recently we have added this to our investment portfolio and have been getting a great response from investors who are retired.

 

[Thomas Beyer]

Decide what portion has to be liquid, i.e. accessible within a week or 4: 1/3 ? 50% ? 10% ? 2% ? ... this depends on your needs and other income sources !

Decide what risk you can tolerate.

Decide if monthly, quarterly, annual or 5 year lump sum events are best for you.

Invest in a variety of assets.

$75,000 is not a lot of money for cash-flow. I hope you have some other investments.

Let`s use 3 buckets @ 25K each:

a) one is liquid, say stocks with dividends, ETFs, REIT or income trusts .. there are many many choices ..

b) one is an illiquid real estate based syndication .. less liquid .. but more hard asset based and not as volatile as the stock market with its ups and downs .. like our investment product .. there are many many choices ..

c) one is for your own deals, say a small house or townhouse .. perhaps rent to own ..

A single family house is not ideal for cash-flow unless low low leverage ! It is better for equity upside in 5 or 10 years ! Other asset classes are better for cash-flow ..

I will be at the REIN event this weekend in Edmonton .. perhaps we can chat there !