Should I buy a retirement home and rent it until my retirement?

[Denise Breheny]

I am now 3.5 years away from retirement and know where I want to retire. I found a new townhome development with affordable pricing on new build home. The HOA pays exterior and grounds maintenance, which I feel is a big plus for me. I would like to purchase a home there in a few months, but I do have some questions. When I look at the cash flow I expect it to be slightly negative (-$300/month) based on current rental rates in the area. This amount includes debt service, HOA, taxes, property management, repairs, vacancy, and insurance. I live in California and currently rent because of high home prices here, I am unable to own a primary residence. I make about $120K/year and I have no deductions so pay a ton of taxes. I am hoping that I would get some tax benefits to my income in this investment. Is this true? I would appreciate any advice.

[Chris Seveney]

Denise Breheny cannot provide tax advice but I do not believe a negative cash flowing property provides any additional benefit to a homeowner besides the typical deductions you can take (which may or may not be impacted based on new tax bill)

In regards to buying now - what is the benefit of buying now vs 3 years where you will have paid an extra $10k in negative cash flow.

I typically recommend against buying properties which are negative cash flow. One thing to also consider is Rehab costs you will have to incur from the rental