Last Modified: 13/10/15
In simple words, property investment refers to investing in home properties (real estate). This method of investing has become much more popular during recent years because of the great investment opportunities it holds, and because it is a great way to accumulate savings and extra income. The price of real estate is constantly fluctuating, and properties that are on the rise can earn an investor a lot of extra money that can be saved and then used down the road.
How does property investment work?
At first, an investor will buy a property and then will allow someone to rent it (commonly referred to as a tenant). The person who owns the property is known as the landlord, and they will normally charge the tenant whatever amount of money will allow them to cover all of the mortgage costs, taxes, and other costs that it takes to maintain the property.
Landlords can profit from this in a number of ways. Some make extra money by charging a small amount more for monthly rent, which allows them to profit frequently while the tenant is living on the property. Another way the profit, but which requires more patience, is waiting until the mortgage has been paid off. At this time, the majority of rent will become profit, and there is also a chance that the property will have increased in value, meaning a great deal of profit.
Investing in real estate can sometimes cause problems and more harm than good, however, if you put in the time and effort that it requires, then you will be successful and can find yourself putting a lot of money in your pocket for down the road.
How much time and effort does property investment require?
There are different kinds of investments and the time it takes to properly invest in them varies. For example, investing in a stock is very simple and doesn’t require nearly as much attention as property investment. The stock sits in your brokerage account and, if you’re lucky enough or have enough knowledge of the stock market, it will increase in value. Investing in a rental property is much different; you will need to put a great deal of time and effort into maintaining the home, making sure that the tenants take care of it and avoid any property damages, etc. This can be a very demanding investment and is definitely not recommended for everyone, however the benefits to getting involved in property investment are definitely leaning in its favor.
How can property investment help you when you retire?
Anything that helps you invest your money and accumulate more will aid you when you finally settle down for retirement. It is definitely ideal that you retire with sufficient funds to enjoy the last years of your life and live comfortably. Having a good amount of funds will allow you to travel, treat your children and grandchildren, and whatever else you feel like doing. Even if you are just going to relax after retirement, it is definitely important to have enough money, and investing is something that a great deal of people do throughout their working years so that they can have this benefit once they retire.
Using property investment for retirement has become a more common method of investing and more people than ever are retiring from their careers with a great deal of savings in their banks.
It has been proven that rental properties can allow a person to accumulate around $200 to $1,000 per month in savings, depending on the property and its location. It is essential for a property to have a good location, and this amount can also go up if the property increases in value. If a person invests in a property at the time their 30 years old, then this means around $72,000 (at the least) in retirement savings by the time that person is 60 years old. Adding this money into an RRSP will mean even more savings!
People can even continue to invest in a property after they are retired. This means they will have a steady flow of money coming into them each month, giving a sense of security. This is an amazing opportunity for those individuals who don’t mind putting a bit of focus and care into maintaining the property, even once they have retired from their job or career.
What do the experts have to say?
Andrew McLean, author of the two books Making Money in Foreclosures and Investing in Real Estate, is also a landlord with a great deal of experience in property investments. He had provided the world with invaluable advice and has quite a few positive things to say about investing in properties:
“Rents are always going to go up; the value of your property is almost always going to go up and most of your costs are going to stay the same, particularly if you assume a fixed mortgage rate.”
“Eventually, even if you’re only making a little in the beginning, you will watch your income climb over the years.”
This is an amazing opportunity and using property investment for retirement is definitely a great option for anyone who is looking to invest in something that will provide them with extra income and savings. If the property is in a good location and they make sure that the tenant is responsible, this is a great way to accumulate money over the years and make a great amount of savings for retirement. Living comfortably after retirement is very important and is something to think about during your working years. It is definitely something to consider and to find out more about. It might provide you with a couple vacations or the chance to pay for your grandchildren’s education years down the road. Investing in a property can also continue after retirement and will provide the individual with a steady income that they can rely on. Although there are some risks (such as not picking a good property or having an irresponsible tenant), with a little bit of work and effort, property investment can be a highly useful tool for you to build your savings through the years.