Passive Income in Retirement is the Goal
The ability to create reliable passive real estate income during retirement is what separates the securely retired from the rest. Income that requires no effort on the part of the investor is typically considered passive, but what does that truly mean from day-to-day? Consider some of these non-real estate sources of passive income and ask yourself, do they require work and are they reliable?
- Stock dividends – large cash outlay, multi-layered risks, on-going research, and account monitoring.
- Ecommerce and other online marketing enterprises – large amount of business risk, daily monitoring, content creation, and cash investments.
- Business Investments and limited partnerships – large amounts of default risk, cash, and unreliable income streams.
In reality, creating and keeping passive real estate income takes a lot of work on the part of the investor and is very rarely dependable. From stock research to inventory sourcing and fulfillment, there are very few ways for a retired person to create stable, truly passive income. While many people assume passive income means something for nothing, expectations must shift away from that idea to avoid disappointment due to the amount of time, cash, work, and effort involved.
Real Estate Income Property Offers Many Benefits
Let’s turn our attention to real estate income as a passive income generator during retirement. Washington DC and surrounding areas offer enormous potential for real estate investment. When purchased properly, a rental property offers a retired person the following fringe benefits:
- Rental properties are easily financed which minimizes the amount of capital outlay required by the retired individual.
- Investors can increase passive monthly income exponentially by purchasing duplexes and other multiple family dwellings.
- There is a high demand for quality rental properties within the Washington DC metro area due to a growing population. This demand creates higher-priced units and fewer vacancies.
Don’t want the call when a furnace goes out in January at 3AM? Rental real estate investing allows the investor to scale his or her daily activities as landlord. By implementing a qualified real estate management firm, landlords can delegate such tasks as maintenance, tenant searches, leasing, and accounts receivable activities. While a management company will charge the landlord 8-10% of the monthly rent received, the fees are tax deductible and can be a small price to pay in the overall investment returns a Washington rental property can provide.
If you are nearing retirement and would like to learn more about the risks, benefits, and rates of returns of Washington DC and Northern Virginia investment properties, please contact our office at: 703-342-8100 or visit our other websites for more information about investment property and investing in the Washington DC metro region.