Real estate investment is one of the few investment instruments which have been there since time immemorial. Having large swathes of land in ancient to modern times was associated with power and supremacy. In an era when there are myriad investment avenues such as mutual funds, gold, Bitcoin, ETFs, Debt Funds and whatnot, real estate remains a trusted and tested investment option. Here is how investment in real estate can set you on a solid financial footing and help you retire early.
Start Early
When you are planning to retire early, you must start planning for it early in your life. As soon as you start earning, you must start investing. If you have just started a job, look for the real estate investment avenues close by and invest as soon as you have a decent sum. At this point in time, the liabilities are almost negligible, family duties are not there and you are in your prime.
When you are making a real estate investment early in your life, decide the kind of property you wish to invest in. Do you want to make an overseas investment and say, look at properties for sale in Brisbane, or invest locally? If a long term horizon and appreciation potential are considered, investing in a land parcel would be wiser. As the land tract does not depreciate in value, there will not be any maintenance charges. This translates into a lower burden and high appreciation potential. If you plan to retire in your 40s, the land parcel you bought at a young age would be an asset at the time of retirement.
Lower Your Debts
When you have decided to retire early, there are some tough financial decisions which you will have to take early in your life. Instead of taking a host of Credit Cards and spending lavishly by taking a host of personal loans, it would be better to save the money and invest in a property.
Investing in real estate does not always mean investing in a plot or a flat. With the introduction of innovative realty instruments such as Real Estate Investment Trusts (REITs) and fractional investment options, one can start with a small sum and increase it like a Systematic Investment Plan (SIP). Investing in such instruments will not burdanize you and will create an asset till the time you retire.
Focus on Creating Rental Properties
The more rental properties you will have, the more convenient it would be for you to retire early. As your income grows, you must invest in properties with a high rental yield. When deciding the properties for rental income, having a good location is of paramount importance. A huge investment in a remotely located and less likely to be developed locality will yield lower rental income than a well-connected one.
As you have decided to retire early, a series of rental properties will help you get a regular income flow after you retire. Research well and beware of emotional investment.
Reinvest in Maintenance
If you decide to go for a built flat or duplex, they will depreciate over time. You must endeavour to keep your properties up and running. Regular maintenance and repair will increase the rental life of the property and will pay you longer. Real estate investments will last longer if you take care of the maintenance part. Choosing the right and long term tenant can help you maintain both the income inflow and the condition of the property.
Improvise Your Investment
Despite a well-researched investment, sometimes a property might not turn out to be as lucrative or as rent yielding as it sounded before. In such cases, be ready to sell the property, sometimes at a discount and reinvest somewhere else. Being ready to improvise on your investment strategy will go a long way in planning your early retirement income.
Conclusively, early retirement requires an early start and efficient planning as well as execution. If executed well, you might very well enjoy your early retirement on a property income.