Retirement has changed over the years. Pensions are disappearing. Social Security is shrinking. And many people are turning to investment properties to help build their nest egg. 

Rental Properties can add an extra stream of income to your retirement portfolio. Buying a property or two could provide enough income to allow you to retire sooner. However, you don't want a rental property to become a drain on your retirement resources.

Here are a few tips on how to use your rental properties for retirement. 

● On-Going Income

You don’t need to sell your rental properties for retirement income, but instead they bring income each and every month. 

Because you’re not selling off assets, you don’t have to worry about running out of money.
 

● Inflation

Rent drives inflation. Your return will continue to adjust making it far easier to live on then simply investing in items such as stocks and bonds that may vary over time. 

● Cost Coverage

Rental properties aren’t free. You do have to invest something, usually both some money and some time. But you don’t have to invest the full purchase price. Others cover most of your costs and you still come out ahead with positive cash flow. With each month that goes by, you earn income and you gain equity. 

● Forecasting

Investors can learn how to accurately forecast their returns. Sure, your take-home profit from each unit can bounce around from month to month. But in the long-term, these expenses average in extremely predictable ways. So at the end of each year, your returns will look similar. 

Your investment grows because your equity in each property grows. That happens through two facts: appreciation and mortgage repayment. 

Most properties appreciate in value over time. And your mortgage balance always drops over time. In fact, your tenants actually pay off your mortgage for you. You earn a paycheck every month, your mortgage balance drops, and your property value goes up—win, win, win. 

● Tax Advantages

Every rental property expense is either deductible or depreciable. Maintenance, property management costs, travel, legal forms, tenant screening reports, insurance, property taxes—all deductible. Mortgage interest, that your tenants are paying anyway, is deductible. 

Rental properties shouldn’t be your only retirement plan. But they can certainly help you reach your needed goal faster and make an excellent supplementary source of income for retirement.  They do require more work and education than other investments, but if you’re willing to put in that work you can enjoy high yields, predictable returns, and ongoing income that keeps coming even as your net worth rises.