Most people know that planning for retirement is an essential part of living a happy and productive life. You have your IRA or your 401(k) and you have even managed to build a modest investment portfolio. However, the real gold may be hiding in your real estate. If you have paid off a mortgage at retirement age, you can take out a reverse mortgage which will allow you to live in your home for the rest of your life and receive a check every month from your accrued equity.
There are some negatives to reverse mortgages, including default provisions. If one of the homeowners has to go to a nursing home and is out of the home for more than one year it could be considered a default. Therefore, it pays to read the fine print and discuss your personal situation with the real estate lender that you trust. If you are 62 years or older and you own your home free and clear, or even have a small mortgage you may qualify for a reverse mortgage.
Of course, if you are planning to leave your current residence to your children, you may want to consider other alternatives such as rental property. With real estate, it is all about location and the climate of the marketplace but smart investors who start early can build a comfortable nest egg upon which to retire.
Rental properties can become a cash drain, so it pays to invest wisely and conservatively and start at as young an age as possible. Rental income from apartment buildings or houses can go a long way toward providing a comfortable retirement, but only if your loan to value ratio is very low and the properties are in good repair. A positive cash flow can be hidden gold for retirees.
For one thing, rents are nearly always going up and so are property values. At some point, even if you are only making a little money in the beginning you will see your income climb over time as your mortgage balance gets lower and the demand for rentals increases. If you have a guesthouse or a very large home consider converting a portion of the property you are not using into rental property. This can bring in extra income with a minimum of cash outlay.
Consult with your real estate professional for ideas on picking up rental properties and turning them into venues for a comfortable retirement.