Buying rental units after age 50 - Bad Idea?

Investor · Albany, GA · Member since 2014 · 70 posts · 8 votes

Hi Everyone,

In a casual conversation the other day a friend said: 'You can't look for a quick return. Any money made will be over the long term.'

That has been bugging me ever since he said it.

Here's my question...

Where do you plan to make your money from a rental? Short term (monthly cash flow) or long term (what does that even mean; appreciation upon selling out) ?

I will admit that when I got into rentals (I own 6 SFHs) I was trying to increase income in the short term. But my friend's comment has kinda rocked my understanding of what it's all about. If I'm investing now to make money LATER then why bother with all the aggravation. Is it worth it?

Another question:

Is it still practical to continue acquiring rental units later in life? If a person is over 50 years old, are long term rentals still a good vehicle for investment?

Look forward to your responses. Thanks in advance...

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Joe VilleneuvePro Member

Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes

Your friend's wrong. Rentals are not short or long term investments...they are "NOW" investments...and continuous at that.

Why wouldn't you want to buy after 50? I'm over 50...and I still buy.

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Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
6y
Your friend's wrong. Rentals are not short or long term investments...they are "NOW" investments...and continuous at that.
Why wouldn't you want to buy after 50? I'm over 50...and I still buy.
30 Reply
Jon Reed
Rental Property Investor · Springfield, MO · Member since 2019 · 462 posts · 365 votes
6y
Where do you plan to make your money from a rental? Short term (monthly cash flow) or long term (what does that even mean; appreciation upon selling out) ?
I say that you create wealth in the long term but you make money in the short term. We are currently in year 2 of our 10 year plan to own 20 doors free and clear. So for the 10 years we make a minimal cash flow since the money earned is being re-invested in the properties to pay down the notes. At year 10 all units will be owned free and clear and our net worth (our wealth) will be significantly higher. So our long-term goal is not selling out but having a multi-million dollar portfolio with zero debt.
Is it still practical to continue acquiring rental units later in life? If a person is over 50 years old, are long term rentals still a good vehicle for investment?

Yep! I would say from age 50-60 a person could acquire a huge amount of wealth in real estate. Then at age 60 start selling off the properties and migrating the wealth into more stable (and low maintenance) investments such as bonds.
4 Reply
Chinda David
Investor · Lincoln, NE · Member since 2015 · 27 posts · 48 votes
6y
@CL Ziegler I am 63 year old and have 14 rental doors and one small mobile home park ( 10 lots and a small house in the park). I also owned my own home and I brought my first 3 Plex at age 59&1/2 ( legible to withdrawn from 401k without penalty). No, never too late for investments and building wealth.
26 Reply
Billy Smith
Shawnee Mission, KS · Member since 2016 · 719 posts · 313 votes
6y
Most folks make most of their money between 40 to 60. So, the answer is big YES go for it you have many years of life experience of handling money, budgeting, dealing with folks etc...
8 Reply
Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
6y
@CL Ziegler I think it depends on your strategy. If you are buying properties, doing rehab and then refinancing to pull out your money, you get some short term gains. On the other hand, if you buy and hold long term and let the tenant pay down your mortgage but don't refinance; then most of your gains are long term. It also depends on your market and how long you plan to hold the units.
As one of the other people said, you make most of your money in the last half of your career, so why not take advantage of it?
0 Reply
Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
6y
Originally posted by @Theresa Harris:
@CL Ziegler I think it depends on your strategy. If you are buying properties, doing rehab and then refinancing to pull out your money, you get some short term gains. On the other hand, if you buy and hold long term and let the tenant pay down your mortgage but don't refinance; then most of your gains are long term. It also depends on your market and how long you plan to hold the units.
As one of the other people said, you make most of your money in the last half of your career, so why not take advantage of it?

Not really. If you buy a property worth 100k, put 20% down (20k), and make 5k/yr in CF, that means after 4 years you recovered your entire cost (tenant buy the rest) and from that point forward you're pure profit from CF.
How many times have you seen the property values go down during a 30 year period?
0 Reply
David Dachtera
Rental Property Investor · Rockford, IL · Member since 2014 · 4k+ posts · 2k+ votes
6y
@CL Ziegler,
No quick return? Don't tell the flippers that! They're doing quite well (some of them).
How you make your money is more a matter of you planning your investing strategy. That's a bit of a challenge in the current environment, of course. Rents might not be rising meaning that income potential - therefore, value - of rentals may be somewhat stagnant just now.
So, you may need to plan a multi-pronged approach.
In today's RE investing environment, what can you do to position yourself for better income and for value gains when the situation changes?
Some education may prove valuable to you as well.
My $0.02 ...
4 Reply
Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
6y
Originally posted by @Joe Villeneuve:
Originally posted by @Theresa Harris:
@CL Ziegler I think it depends on your strategy. If you are buying properties, doing rehab and then refinancing to pull out your money, you get some short term gains. On the other hand, if you buy and hold long term and let the tenant pay down your mortgage but don't refinance; then most of your gains are long term. It also depends on your market and how long you plan to hold the units.
As one of the other people said, you make most of your money in the last half of your career, so why not take advantage of it?

Not really. If you buy a property worth 100k, put 20% down (20k), and make 5k/yr in CF, that means after 4 years you recovered your entire cost (tenant buy the rest) and from that point forward you're pure profit from CF.
How many times have you seen the property values go down during a 30 year period?

True. I guess it depends on your market. Where I am, it would be very rare to see a place that cash flows $400/month with a traditional mortgage.
0 Reply
Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
6y
Originally posted by @David Dachtera:
@CL Ziegler,
No quick return? Don't tell the flippers that! They're doing quite well (some of them).
How you make your money is more a matter of you planning your investing strategy. That's a bit of a challenge in the current environment, of course. Rents might not be rising meaning that income potential - therefore, value - of rentals may be somewhat stagnant just now.
So, you may need to plan a multi-pronged approach.
In today's RE investing environment, what can you do to position yourself for better income and for value gains when the situation changes?
Some education may prove valuable to you as well.
My $0.02 ...

Don't sell yourself short. |This is worth quite a but more than just 2c
2 Reply
Joe VilleneuvePro Member
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
6y
Originally posted by @Theresa Harris:
Originally posted by @Joe Villeneuve:
Originally posted by @Theresa Harris:
@CL Ziegler I think it depends on your strategy. If you are buying properties, doing rehab and then refinancing to pull out your money, you get some short term gains. On the other hand, if you buy and hold long term and let the tenant pay down your mortgage but don't refinance; then most of your gains are long term. It also depends on your market and how long you plan to hold the units.
As one of the other people said, you make most of your money in the last half of your career, so why not take advantage of it?

Not really. If you buy a property worth 100k, put 20% down (20k), and make 5k/yr in CF, that means after 4 years you recovered your entire cost (tenant buy the rest) and from that point forward you're pure profit from CF.
How many times have you seen the property values go down during a 30 year period?

True. I guess it depends on your market. Where I am, it would be very rare to see a place that cash flows $400/month with a traditional mortgage.

All markets are different. If you want $???/month, you need to find it...and invest there. If you're happy with less, then that's fine too.
0 Reply
Bjorn AhlbladPro Member
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
6y
I am waaay past most people's ages here and still buying. Rents fund my retirement lifestyle. It depends on 'why' you are investing.
5 Reply
Jill F.
Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
6y
Originally posted by @CL Ziegler:
Hi Everyone,
In a casual conversation the other day a friend said: 'You can't look for a quick return. Any money made will be over the long term.'
That has been bugging me ever since he said it.
Here's my question...
Where do you plan to make your money from a rental? Short term (monthly cash flow) or long term (what does that even mean; appreciation upon selling out) ?
I will admit that when I got into rentals (I own 6 SFHs) I was trying to increase income in the short term. But my friend's comment has kinda rocked my understanding of what it's all about. If I'm investing now to make money LATER then why bother with all the aggravation. Is it worth it?
Another question:
Is it still practical to continue acquiring rental units later in life? If a person is over 50 years old, are long term rentals still a good vehicle for investment?
Look forward to your responses. Thanks in advance...

Oh gosh! I hope buying after 50 isn't a bad idea; I started buying at 54 ;). We are up to 33 units with 16 under contract. When the current deal is complete, our monthly free cash flow will surpass our monthly living expenses. We try to buy groups of units where we can add value. We are figuring that appreciation will allow for the purchase of more units and/or be for the future benefit of our children. We are trying to set up a business that will produce enough income so that it will permit one of our kids to make a living running (and growing) the company, support us in our old age (when we become passive investors), and provide a nice inheritance for all of our children.

16 Reply
Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
6y
I thought 60 was the new 30. Please don't say it aint so!!!! My body will believe it as long as my brain says it :)
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22 Reply
Ronan DonnellyPro Member
Investor · New York City, NY · Member since 2012 · 332 posts · 385 votes
6y
Hi @CL Ziegler, I would flip the question round and ask if it is practical to not invest in rental property at age 50+. You likely have more cash, more time and potentially IRA funds that can all be deployed in order to give you increasing amounts passive cashflow and equity buildup, in addition to some significant tax advantages. Good luck!

[email protected]
3 Reply
Henry R.Pro Member
Rental Property Investor · Saratoga County, NY · Member since 2013 · 178 posts · 73 votes
6y
@CL Ziegler,
Good afternoon.
How old will you be if you don't buy?
Property that makes you money does not care how old anyone one is cashflow is money in your pocket at any age. I'm over 50 and still invest.
Don't get caught in the " too " syndrome, I'm too old for this too late for that. Live now, go for your dreams/goals.
9 Reply
Frank Chin
Investor · Bayside, NY · Member since 2017 · 1k+ posts · 1k+ votes
6y
Interesting question.

My mom in law always thought real estate was the way to wealth but her husband wasn't. Her husband died when she was 60 years old, with his life insurance, savings from lifetime of scrimping, an accident insurance settlement, she had $600K. Normally, at that age, with that amount of money, you live off of it. Not her.

At her husband's death, they lived in a rental apartment. In 1980, she went out and bought a triplex, all cash, for $110K. By 2006, her health deteriorated, sold the triplex for $860K. Just with this investment, her return was greater than her total wealth in 1980 of $600K. She then bought a COOP, in 1986 for $80K. She just passed last July, we sold it for $280K.

She had three children. With her help of separate $50K investments each, we bought the first two triplexes. The first $50K was the entire down payment for the first triplex. We had $50K for our second triplex, but she insisted on putting $50K into it, $100K down on a $180K property. Back in the 80's, with interest rates of 13% or more, we even managed to cash flow very well.

Similarly, she purchased several rentals with her son, a doctor, put $50k each back in the 80's, 90's and each is worth $1.0 million plus, as SFR in San Francisco all passed the one million threshold 10 years ago, in the crazy market there, and I'm told they're all mortgage free right now.

She also bought one SFR with her youngest daughter.

Counting everything up, from 1980, when her husband died, when she's 60 years of age, with the $600K on hand, no job and in retirement, I counted up conservatively, $5 million returns between her and her children here in NY and San Francisco. Just with her all cash $110K investment in a triplex, sale of it, and subsequent purchase of the COOP, was a million dollar return right there. And she didn't even leverage it, it was all cash. Had she leverage, could've done better.

These are just capital gains. We didn't even count cash returns all these years. The rent she collected from her mortgage free triplex paid much of her monthly bills, taxes, utilities, and living rent free. I lived rent free since my 1st triplex.

13 Reply
Dave FosterBusiness Member
Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
6y
@Frank Chin. I love your mother in law!!! I think what so many people overlook is the biggest thing that she got out her investing life - and it's not money.
It's purpose and a sense of goal! Once you start living just to not die you're already dead. The only variable is the date of your burial. A cautionary tale to all who think of retiring as ceasing to work.
Find something you like. And let it kill you - Kinky Friedman
Happy New Year everyone:)
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10 Reply
Kiera Underwood
Real Estate Agent · Oklahoma City, OK · Member since 2019 · 956 posts · 600 votes
6y
@CL Ziegler in my experience even in a cash flow focused market you still make money long term with payoff and apprecation.. you just get the benefit of short term cash to help with capex etc. Of course you usually don't get as much appreciation as an appreciation focused market, but you also stay stable during the downturns in a cash flow focused market.. so 20 years in you don't have to worry about being in the bottom of a market cycle and not being able to cash out as much.
0 Reply
Andrew Oladipo
Investor · Carol Stream, IL · Member since 2014 · 49 posts · 11 votes
6y
@Kiera Underwood
It is never late to venture into real estate!
2 Reply
Michael Robbins
Property Manager · Henderson, NV · Member since 2018 · 501 posts · 317 votes
6y
I personally only invest if the the rental generates cash and has solid long term economic prospects. I do not bet on appreciation or invest on the hope that cash flow will one day be positive or the hope that an area will develop around the subject property. I advise the same to any client I come across looking to buy a rental.
2 Reply
Angelo Mart
Professional · Parsippany, NJ · Member since 2013 · 384 posts · 262 votes
6y
I met a landlord that self managed until their 60s. After a certain point of building up a lot of rentals they hired a property manager to oversee everything. They also partially self management themselves to oversee the prop manager operation. The properties were paid off at this point and cash flowing strong. Additional my neighbor manages a 4 Unit and she is 65 years old. She plans on giving the property for her son to completely manage in a few years.
So many ways to work it...best of luck...Happy New Year
0 Reply
Brian Roberts
Rental Property Investor · Member since 2018 · 34 posts · 25 votes
6y
@CL Tumlin Lots of good responses on here but something that hasnt really been brought up to much is that it depends...
Good investments are strategy based in order to get the return that you need. Also investing in real estate doesn't have to mean looking for rent on the first and fixing toilets.
A good investment for me at 32 may not be a good investment for someone who is closer to retirement age, but it could be. I focus on property that cash flows from day 1(short term) and allows tenants to pay down financing(long term).
A way to keep investing and not deal with the day to day that I do might be as a hard money lender for someone willing and able to hustle. Or use property management to make yourself as passive as you would like. You can always invest in syndication, or commercial deals as well.
Not saying that those scenarios apply to you directly. Only meant to convey that the beauty in investing in real estate is that over time you can grow or change as your situation requires.
2 Reply
Gary L Wallman
Rental Property Investor · Beavercreek OH · Member since 2018 · 422 posts · 970 votes
6y
Originally posted by @CL Ziegler:
Hi Everyone,
In a casual conversation the other day a friend said: 'You can't look for a quick return. Any money made will be over the long term.'
That has been bugging me ever since he said it.
Here's my question...
Where do you plan to make your money from a rental? Short term (monthly cash flow) or long term (what does that even mean; appreciation upon selling out) ?
I will admit that when I got into rentals (I own 6 SFHs) I was trying to increase income in the short term. But my friend's comment has kinda rocked my understanding of what it's all about. If I'm investing now to make money LATER then why bother with all the aggravation. Is it worth it?
Another question:
Is it still practical to continue acquiring rental units later in life? If a person is over 50 years old, are long term rentals still a good vehicle for investment?
Look forward to your responses. Thanks in advance...

CL,
I started buying rentals in 2007. I was 52 years old. 13 Years later I'm about to turn 65. The primary difference in those years is that I've acquired over 85 SFR's and another 35 or so multi doors. No mortgages on the SFR's and very few on the multis. Now I have to face retirement cash flowing over 100k a month. Admittedly my timing was spot on, but I thought it was obvious to buy homes at a 50% discount. Thankfully, not everyone else did.
So the resounding answer is yes. RE investing should be started at any age and continue as long as you still enjoy it.
5 Reply
Noah Smith
Contractor · Gadsden, AL · Member since 2019 · 23 posts · 5 votes
6y
@CL Tumlin real estate is a good investment at any age. There is right now cash flow if you buy currently. And over time appreciation that you can profit from. No age is too late or too early. It's not debatable. There are ways to make it work great for anyone in any situation.
0 Reply
Craig Jeppesen
Rental Property Investor · Chubbuck, ID · Member since 2018 · 532 posts · 466 votes
6y
Cashflow is your short term quick cash or wealth and is great, but the bulk of wealth created in RE is long term via appreciation and loan pay down and eventually step up basis when you die and pass it on. You can also create short term wealth buy buying fixer uppers and doing brrrs or flips.
1 Reply

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