For retirees calling it quits from the 9-to-5 world, it might be worth considering another career move: landlord.
In today’s economy, it seems that everything old is new again … albeit with a bit of a twist. Years ago, it was common for older couples – and frequently widows – to rent out rooms for extra income. Taking in boarders was a viable way to supplement income.
Well, the idea is back, with a bit of a twist. As Baby Boomers face the cold, hard facts of retirement, they are increasingly changing the definition of the term to include at least some form of work. While you may not be ready to hang out a shingle on the front gate, “Rooms for Rent,” you might consider becoming a landlord. In fact, the venerable Wall Street Journal writes that it may be just the ticket, especially given the uncertain prospects for stocks and bonds and the meager interest rates on savings accounts.
Think about it. It’s a buyer’s market now, so purchasing a multi-family home is more financially feasible. And, the trend toward the renter’s lifestyle is picking up steam. All this means you have a low cost of entry into a market that is expected to expand. Starting to make investment sense?
Sure, it’s a career of sorts, but you also need to think of it as an investment. Weigh everything in the short term, including start-up and maintenance costs, as well as the marketability of the location you’re considering. But then also keep your long-term goals in mind, including appreciation and eventual sale. Buying in a depressed market, after all, is only a steal if that market bounces back. Finally, don’t overlook the possible danger of having all your eggs in one basket since being a live-in landlord will unite your home, equity, and employment, into one potentially risky asset.
Like any retirement move, don’t make this one too quickly. Discuss your plans with a professional, such as your certified public accountant and your financial planner, who can help you sort out the details, including how an investment rental property could affect your taxes and income. And, I wouldn't be a good estate planning attorney, if I don't remind you to title that new investment in the name of your trust. Remember, too, that this lifestyle may not suit you. In which case, you would be wise to explore other, more enjoyable options, such as purchasing a house on wheels and RVing across the United States.
Please check out our website for many legal issues facing retirees and their families.
Reference: The Wall Street Journal Online (June19, 2011) “Want a job? Become a landlord.”