Just about everybody wants a happy, healthy and stress-free retirement. Whether you’ll be collecting from a pension, working casually or part-time, or investing your money, it’s important to have a stream of income to draw from in your Golden Years. Some Canadians turn to becoming a landlord during retirement, which can provide a healthy stream of passive income. If you’ve been considering becoming a landlord as part of your retirement plan, you should weigh the pros and cons before making a decision.
Don’t just jump in – make your investments well in advance
Before you officially make the decision to become a landlord as part of your retirement plan, it’s imperative that you gain experience as a real estate investor and landlord well before you retire. Real estate investing is a very common form of investing and financial planning, and so it’s likely you’ve already taken the plunge, or have at least considered it. You don’t want to be retired and only just dipping your toes into the world of real estate and being a landlord – it takes time, experience, and know-how to be successful.
Ideally, your investments should happen at least a decade before you decide to retire. This will give you more than enough time to purchase properties, rent them out to tenants, and gain first-hand knowledge and experience about what it means to be a landlord. It’ll also be extremely valuable for learning important lessons – what to price your rentals at, what is expected by tenants, and what improvements you can make to the rental properties to boost their value and attractiveness.
Having a bad or problematic tenant, neighbour, or situation is inevitable as a landlord, and so it’s best to get that experience well in advance of your retirement so you can have a better idea of what to expect. That means learning how to screen tenants, run reference and credit checks, conducting inspections, and performing or contracting out maintenance and repairs. If the return on investment is favourable and you don’t mind dealing with tenants, neighbours, maintenance, or the occasional difficult situation, then being a landlord during your retirement might very well be for you.
Enjoying your retirement should remain a priority
Even if you find that being a landlord is something you can manage easily, it’s important to remember that you’ll only have one retirement – it’s critical that you’re able to enjoy it to its fullest. In order to get the most out of your real estate investments and continue enjoying your retirement to its full potential, it’s highly recommended that you hire a property management company. A property manager will be able to free up your time by handling things like tenant screening, maintenance, inspections, rent collection, and more, so you can focus on doing the things you’ve always wanted to do while still enjoying the benefits of your passive income.
They’ll also help make sure that your properties are always occupied by high quality tenants, saving you time consuming (and expensive) headaches so you can enjoy your time stress-free. Hiring a property management company will become especially important as your retirement progresses – you won’t always have the time or energy to deal with everything that being a landlord demands.
The common argument against property management companies – that they cost too much money – is poorly thought out. If you add up everything they do, especially the experienced tenant screening, their cost is more like insurance against having a bad experience and lost income. It’s also worth considering that while you may be able to handle light repairs and other duties in the early years of your retirement, you may not be able to carry on with them in your later years.
Most property management companies will allow for hybridized duties, such as you are responsible for repairs and they are responsible for all other items. This kind of service will help you stretch your dollars further if you want to in your early retirement years – although it is also worth noting that it’s always best to hire a professional to do something that you are not an expert at.
Discuss your decision with a professional
Since you’ve been working towards your retirement for so long, it’s important to remember not to make any decision lightly, nor without advice from trusted professionals. Before you make any decisions about being a landlord as part of your retirement plan, consult with an accountant and/or a Certified Financial Planner (CFP) and discuss how real estate investments could impact your retirement plan. Your retirement deserves to be a stress-free and enjoyable time, and a professional will work with you to determine pros and cons of being a landlord during retirement, and the implications of real estate investments on things like RRSP withdrawals.
Being a landlord is a great way to earn passive income throughout your retirement, especially if you know what to expect and learn your way around the landlord lifestyle well in advance of your retirement date. Hiring a property management company to handle things like tenant screening, maintenance, inspections, and other aspects of being a landlord can free up your time so you can continue to enjoy a stress-free and financially solid retirement. Remember to consult with a professional before you make any decisions, and to plan your moves out far in advance. With the right amount of planning and experience, you’ll be able to enjoy a successful career as a landlord during your retirement.
HighGate Properties offers Toronto real estate investing and property management services that can help make your career as a landlord less stressful and far more enjoyable. We’ll help you find the right property to buy to turn into a rental and then manage it for you – or just one or the other if that’s what you want. Our team of experienced Toronto property managers handles all aspects of residential property management, including maintenance, inspections, repairs, upgrades, and more so you can have time to enjoy your retirement. To learn more about the property management services offered by HighGate, get in touch with us today.