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Middle Tennessee Rental Property as Retirement Income – Investing in Action

Searching to diversify and gain rental property investments? Buying a Middle Tennessee rental property as retirement income can be a great choice. If you buy the right property and manage it well, it can easily become a reliable retirement nest egg. It can also mitigate risks from stock market volatility with a more balanced portfolio. Plus, Murfreesboro, Smyrna, LaVergne and surrounding Middle Tennessee cities are experiencing enormous growth, which makes this a particularly ideal area for rental investments.

Rental investing in action

After the initial downpayment, a rental property can basically pay for itself using tenant rental payments to cover the mortgage and other costs. At the end of a 30-year mortgage, much of the rental income becomes an annuity to the owner, and the value of the property will have risen dramatically.

Following is an example of a median-priced existing home with 20% down. (For simplicity, we are not even covering the tax advantages of depreciation and operating cost deductions.) Add average costs and this investment would lose just $230 per month for the first year. With rental prices rising, the loss would become a profit in just a few years. (All estimates based on March 2017 online sources.)

  • Median existing 3-BR single-family home price in U.S. (Source: YCharts 1Q17): $236,400
  • Down payment @ 20% : $47,280
  • Monthly median rent for 3BR single family residence (Source: RentRange): $1,379
  • Mortgage cost per month @ 5% interest (Source: YCharts ) : $1,015
  • Monthly maintenance & repairs @ 1% of home value (Source: Zillow) : $197
  • Insurance (Source: Vale Penguin) : $80
  • Management fees (Source: RPM estimate of average property management fees): $138
  • Property taxes (Source: WalletHub): $179
  • Monthly estimated cost: $1, 609
  • Monthly net loss/out-of-pocket expense: ($230)

Gains from Middle Tennessee Rental Property

After the mortgage is paid off in 30 years, there will be additional cash flow from the property. Plus the property value will increase over time. Assuming an average 3.4% property value increase during the next thirty years, the $236,400 house value will become $477,528. If converted to an annuity with a 2% return above inflation, it would produce $2,500 in monthly retirement income for 30 years.

As demonstrated, a rental property investment becomes a source of on-going retirement income. Since the actual cash investment was $47,280, the return on invested cash is tenfold. If sold in retirement, the property would yield a payout of nearly half a million dollars. Not many IRA’s or 401K’s can be expected to deliver that type of return.

Rental Property Management Solutions Can Help

The biggest complaints property investors have about rental properties is the time and hassles they can present. By hiring Real Property Management Rental Solutions, based in Murfreesboro, TN, these issues are overcome. We find and screen tenants, collect rents, manage maintenance, and handle the bookkeeping. This type of investment can be as easy and carefree as an IRA or 401K. And the benefits include excellent returns, reduced risk from a balanced portfolio of investments, and tax benefits.

Call us today at 615-900-4067 to find out more about how we can help you with your Middle Tennessee Rental Property!