How To Figure Out When You Can Actually Retire On Your Investments
When investing in real estate, more than likely your main goal is to set yourself up so you can retire on your investments. You may spend years putting together a portfolio of properties to help make it so you’ll never have to work another day in your life. You’ll pour your blood, sweat, and tears into your investments because you know that someday, it’ll all be worth it. But, the question remains as to when it’s actually realistic to retire on said investments. That question is actually a trick one to answer, as several factors will actually play apart into when you can realistically retire on the properties you have right now. So, in this article, we will outline for you the different factors you’ll want to consider when trying to decide when it be smart to retire with the properties you have.
First, let’s consider the obvious factors that are the real link into the equation of when you can retire. You obviously will want to figure out how much it will cost you to live for a year. Then of course you have to count in the amount of money it will take to maintain all of your properties for a year. Plus, you’ll probably hope to live into you’re about 90, so that also needs to be added into consideration, along with how much you’ll actually make, aka your income for a year. All of these aspects are pretty obvious when it comes to trying to figure out when you can actually retire. However, there are a few other aspects that many investors fail to realize when coming up with a retirement plan, for instance, a disaster recovery fund.
You of all people know life can sometimes just happen. And no matter how much you plan or try to prevent disaster, it sometimes just comes. So, you need to make sure that you take it into account when figuring out when you can retire. The problem though, is that they are completely unpredictable. And while insurance will cover most disasters, there are still some things that can happen. That will set you back thousands, if not hundreds of thousands, of dollars. So, because of this, we suggest that in developing your equation for retirement, you leave yourself about a $10,000 base, along with $2,000 extra per house that you have. By setting aside these amounts, you can give yourself a safety net, should something occur.
However, we still aren’t finished. Aside from the expense of a disaster, you still have other expenses. And often times, as you probably already know, expenses vary per month. Yeah, you have your consistent expenses, like insurance that probably won’t change all that much. But, what if a refrigerator goes out? Or you need to upgrade that one kitchen you’ve been putting aside for years. Regardless of what it is, its very difficult to actually predict what your expenses will be every month. And not only that, but income will also vary. For instance, you may have months where it comes in pretty consistently. But then you may go through a dry spell when several of your tenants decide to move on, and your homes are sitting there empty. So, this is another element that needs to be added to your continuing growing equation.
Finally, the last aspect you’ll want to consider during your retirement planning process is expanding your portfolio. More than likely at some point you’ll want to buy another property. So, this will be yet another element you’ll want to plan for. Granted, you may be able to do these properties virtually cashless, where you rely on a 30-year mortgage and renters to pay it off the payment every month. But, you’ll still need to come up with the funds for a down payment.
In conclusion, while the prospect of every being able to retire on your investment seems daunting, it is actually very plausible. It just takes proper and meticulous planning to set yourself up so that you can retire successfully. The key is to be aware of all the little details that go into investing, as well as giving yourself more than one safety net. By doing your due diligence and research, you to will be able to find the real link between your investments and what it will take to retire. Good luck!