Let me make something clear: I don’t expect to retire the conventional way.
Why? Because the retirement of our parents and grandparents continues to be something millennials are putting in their rearview mirrors. We recognize that if we don’t take charge of our financial destiny, we’ll end up working into our 70s or 80s or risk retiring broke (one GOBankingRates study found that 42 percent of Americans will do just that). I’m not a big fan of that.
So, my wife and I decided we’re going to commit to buying rental property to fund our retirement.
Using a Side Hustle to Buy Property
In our area, to get a solid rental property, we will likely spend about $100,000. Obviously, paying the down payment alone on multiple properties will be expensive.
To do this effectively and not use the income from my day job, we plan to use a portion of the earnings from my blogging side hustle. Over the coming years, we will save up the money to put down 20 to 30 percent on the rental units.
No, it’s not going to be a quick process. However, as we see it, people always need a place to live. So, the investment will pay off in the end.
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We Will Pay Off Our House Early
To reduce our expenses in retirement, we will pay off our house early. There’s no need to carry the financial burden of a mortgage into retirement.
So, as we’re saving for retirement to purchase rentals, the income we receive won’t have to go toward covering another mortgage. Plus, as the properties are paid off themselves, more of the rental income will go into our pockets.
Food for Thought: You’d Be Rich If You Bought a Home Here 20 Years Ago, Study Finds
Our Properties Will Fund Our Lifestyle
At the end of the day, we figure the properties can bring in $5,000 to $6,000 per month based on current rents. Our normal expenses (outside of any outlandish healthcare costs) are easily covered by the rental income.
Now, we can’t foresee every expense, and surviving rising healthcare costs is a struggle for people in retirement. So, we realize this plan isn’t perfect for every scenario, and we will need other investments to cover those costs. However, it will fit the retirement lifestyle we plan to lead on a daily basis.
As conventional retirement continues to be a thing of the past, I encourage others to find ways to bring in additional income to fund your golden years. You’re going to need it.
More on Making Money
- I’m Only 35 — Why Retirement Is My No. 1 Focus
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- Watch: Investing for Beginners: How to Invest in Real Estate
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This article originally appeared on GOBankingRates.com: How I Plan To Fund My Retirement With Rental Property