7 Early Retirement Planning Advice For Single mom
The average working-class single mom is continuously worried about having to retire, if there is one thing they worry about regularly.
Not having enough money to enjoy our elderly years in a carefree manner. But I’m here to tell you right now that one of the best ways to make that lifestyle a reality is through real estate. And when I say real estate, I mean using rental properties to develop passive income as a means of achieving financial independence.
How a single mother can retire early with just a few rental homes under her pocket
There’s no doubt that achieving Financial Independence as soon as possible appeals to you as much as it does to the next person, even if you don’t currently have any plans to retire in the traditional meaning of the word.
By the way, having financial independence is being able to live off of investment income in retirement. Let’s quickly review the ways of rental properties.
One of the best strategies to retire early from passive income for single mom, which can either come from rental income or market value appreciation, has always been and will always be investing in rental properties.
Additionally, for those with a DIY attitude and the patience to handle renters, owning rental properties can be a terrific option. You might also employ a property manager to take care of the management of your rental properties. However, purchasing rental properties does not necessitate a little amount of capital to cover void periods and up-front maintenance fees.
How can a Single Mother retire early with just a few rental properties?
By now even those who are relatively new to real estate investment must know a thing or two about rental properties just by reading so let’s take a look into various ways you can gain early Financial independence with just a few rental properties
1. Early Retirement Planning Advice For Single mom : Constant Flow of Cash
One alluring aspect of investing in rental properties is that once they start bringing in money for you, they never stop. Not only that, but when you own rental properties, you’re not required to sell off assets the way you would with stocks and bonds.
For instance, if you achieve financial independence through stock and bond investments, you would need to occasionally sell off some shares so you could live off the proceeds.
While this is completely a terrible thing it means that your net worth Will shrink over some time and you stand the risk of running out of money.
Rental properties however are a gift that keeps giving and I mean that literally you do not sell your assets off and risk being cashed short they just keep generating income for you; while appreciating in market value too.
2. Early Retirement Planning Advice For Single mom : Leverage The Influence of money from other individuals
The majority of real estate professionals would advise you that in order to successfully invest in real estate and rental properties, you must be able to spot both short- and long-term chances and make use of other people’s money.
In truth, successful real estate investors frequently borrow money from others. You can do this to fund the majority of your costs and purchase a home.
Their money becomes your personal asset the good thing about using other people’s money to finance the property acquisition is that while the repayment remains at a fixed rate the rental income and Market appreciation of your property will continue to increase over time.
The use of other people’s money comes from various means such as seller financing micro loans Equity partnership and hard money lenders.
3. Early Retirement Planning Advice For Single mom : Rent Increases Annually
Unlike stocks or bonds, redskins increase steadily in today’s economy to keep up with inflation. This basically means that, unlike bonds, you don’t have to worry about your returns declining when inflation rises because it is a major driver of inflation.
For example if you invest in a bond paying 10 annual interest and the inflation rate is four percent your true return would only stand at six percent. If you invest in rental properties however your rental income would increase practically every year as the inflation rate increases.
This is an ideal way of making passive income with much fewer risks from the financial market.
4. Early Retirement Planning Advice For Single mom : Dependability and Less Risk
If you purchase shares on the stock market, you can only research typical returns and hope for the best. You also have little to no control over this investment because you are not a member of the company’s decision-making structure when purchasing shares.
On the other hand rental properties are relatively much easier to predict returns and control risks as long as you have an in-depth knowledge of real estate Investments. You simply have to know the purchase price and Market rent then be able to forecast your expenses to a high degree.
You can also improve Property Management to reduce vacancy and turnover rates. You can then renovate the property to attract better tenants to improve the quality of your renters.
Now obviously this is much more expensive and requires a lot more management care than usual but it efficiently reduces the risk of low returns bad tenants and low Quality Rentals.
5. Early Retirement Planning Advice For Single mom : Diversification of Asset Classes
Investing in the stock market has been known to be a common means of generating passive income even in retirement however the stock market is very volatile and can crash at any moment. If all your money is tied up in paper assets like the stock market what happens if the market crashes the real estate market on the other hand is much more stable.
As real estate values and rents have little or no correlation with the stock market with a rental income generated from properties forming a major portion of your investment income you don’t need to worry each time the stock market crashes or has dipped.
You could also go into real estate investment trusts or REITs but that has much more to do with the stock market than regular rental income. Diversification of assets reduces the potential risk of whatever happens in the market.
6. Early Retirement Planning Advice For Single mom : Benefits Tax and Liabilities
One of the key benefits associated with rental income is the ability to claim a depreciation reduction on your federal income tax. Every property related expense is either depreciable or deductible this includes expenses such as meals, travel, repairs, Renovations, decrease in property value and even your home office.
The best part is that these deductions are above the line this means that you can still take the standard deduction on your personal returns even as you deduct these rental related expenses. Depreciation even lets you deduct the cost of the building itself over time you can deduct the cost of the building and the cost of any Capital Improvement you make.
Over the first 27.5 years you own the property as a rental property investor make sure you know about all the tax related benefits of real estate Investments as you plan your tax strategy.
What are the Downsides of Owning Rental Properties?
While rental properties have their obvious and many perks, there’s still no doubt that they like any other Investments have their downsides. If everyone automatically makes 15 of their investment or more from rental property income there’s no doubt that much more people would be involved in it.
Let’s talk about some downsides to rental property investment it takes a lot of time and education to figure out what properties to invest in. We always recommend proper in-depth analysis and expert opinions from Real Estate experts.
Because the truth is that markets can be harsh at times too. You also need a large investment to manage properties even if you use leverage to acquire the property the truth is that a property that costs thirty thousand to acquire is going to to cost more than that to maintain it, you’ll need emergency cash if for example a property needs to be renovated or a tenant needs to be evicted.
Also for rental properties a lot of management time is required even if a property manager is hired you still have to manage him or her.
A property manager will typically cost eight to ten percent of the monthly rents and some will charge a leasing fee as well a property manager will make your rental properties a mostly passive investment with little work needed from you.
Other problems that may arise include tenants who fail to pay and difficulty in finding tenants which means you won’t be bringing in any income while the property remains vacant.
There’s a whole lot involved in rental property investment but its returns over time make it absolutely worthwhile to help you get started you can watch our step-by-step breakdown on how to buy rental properties using business credit which means no money is needed for you at all.
What is financial freedom? This is a question that many people ask, but it is not always easy to answer. Financial freedom means different things to different people. For some, it might mean being able to quit their job and travel the world. For others, it might mean being able to provide for their family without having to worry about money.