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Buying Your First Investment During Retirement

Guest post by Jim McKinley

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Retirement is the perfect time to chase your dreams. If one of those is to own investment properties, keep reading. We’ll take a look at how to do just that while enjoying the freedom of walking away from the 9-to-5 world.

Coach Win can help you plan for the non-financial aspects of retirement while you work with your financial advisor to meet your financial retirement goals. Sign up for a coaching session today!

It Starts with Research

Some of America’s wealthiest people are real estate investors. However, they did not get that way by accident. The vast majority of these money-savvy moguls began their careers by researching the market and deciding whether or not profits were for the taking. You will need to do the same to get a better feel for properties and prices.

Find a home in a desirable location that is attractive to tourists and tenants. For example, Orange County is well known for its water sports, world-class golf courses, and dining and nightlife. By locating your investment home near these activities, you’ll be well on your way to purchasing a profitable property.


Next, decide if you are cut out for life as a landlord. This means you must be willing and able to communicate with the public and respond to issues, such as a leaky faucet, in a timely manner. If you do not plan to live in the same town as your rental property, it pays to put together a team of contractors that you can contact when issues arise. When you choose to buy and live in the same area, you can still have helpers on retainer, but you will make — and save — the most money if you do your own minor repairs.

A New Business

Once you become a landlord, you are essentially a small business owner. At this point, one smart move is to incorporate as an LLC so that you can choose your tax structure. SmartAsset explains that a limited liability corporation offers income and tax flexibility. This type of business structure is also beneficial because it lessens the impact that business losses will have on your personal assets, such as your primary residence or vehicles. Not only does an LLC limit your liability, just like it sounds, it can also bolster equity protection.

Debt and Down Payment

At retirement, you’ve likely already paid off most of your debts. If not, you’ll want to do this before you begin searching for a property. Investment properties are considered a greater liability than a personal residence — meaning your mortgage agents will want to ensure that you are financially secure and don’t have other obligations that might force you to miss a payment.

You will also need to secure a hefty down payment — at least 20% — and be prepared for a higher mortgage rate. The Mortgage Reports estimates that you’ll pay up to 0.75% more in interest than on a primary residence. Make sure to factor this into your monthly rental fee.

Ongoing Expenses

A final consideration before jumping into an investment property is to know your total cost. You’ll need to factor in not only your mortgage and landlord insurance but also property taxes and home upkeep. As the property owner, you are also responsible for unexpected major damage, such as a tree through the roof or a plumbing mainline breach.

If you have saved responsibly and can find a property on the lower end of your budget, you can turn your retirement dollars into an investment vehicle. Further, by owning real property, you can leave a financial legacy for your children and grandchildren. But you will need to do your research and calculate your cost ahead of time. Your realtor is your greatest ally in your quest for a successful real estate venture, so choose them wisely.

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