If you are thinking about investing in real estate, you will quickly realize how overwhelming it is due to the wide variety of options you have; this can easily decrease your desire to invest. Well, you’re in luck because we can narrow it down to the two most common investments made and the factors that contribute to one being better than the other.
These two common investments are:
•Investing in retirement communities
•Investing in Buy-to-Let style homes
Retirement communities are communities that offer housing for people over the age of 55 and are limited to this demographic only. Buy-to-Let mortgages are used by landlords who buy property for the sole purpose of renting it out to others. So, which one will result in a higher yield?
Investing in retirement communities will result in higher yields. This is due to a variety of different factors. Each factor affecting the results differently. The factors associated with retirement communities are much more favorable.
The biggest fault with buy-to-let are the taxes, strict tax crackdowns have made it more difficult to utilize buy-to-let financing. Other factors include: the turnover rate for these properties is high due to the demographics of people who rent. Usually, renters are not yet financially stable and are not comfortable enough to buy. This instability can change rapidly and eventually, renters will want to “move up” in life and buy a home; leaving you in sporadic periods of time with no income from your rental property.
Now, we come to retirement communities. Three of the biggest factors making retirement communities the better option to yield higher results are as followed:
•First, retirement communities are growing exponentially! Which makes sense, people age, with age comes less ability to do daily activities independently and this causes many to move to a retirement community so they can have any extra help they may need. People are never going to stop growing old therefore, the demand for retirement communities is only going to increase.
•Second, the location of retirement communities makes them extremely desirable. They are in smaller more quiet towns with other elderly people. This makes for a more peaceful living environment and a slower pace of life that eases the stress and anxiety that comes with faster on the go types of environments.
•Third, you can consider the social benefits for the people living within these communities. This is more psychological than financial, but it is equally important. Elderly people living in a community with only other elderly people gives them a sense of social belonging and fitting in. Everyone needs this feeling of belonging and once they get it, they will stay; which means longer term financial income from more steady clients.
This only scratches the surface regarding retirement communities resulting in higher yield and much more can be investigated; however, use this core information to allow you to think logically about these two options and gain a fundamental understanding to build more knowledge on. Use this as your starting point, know these well and use this knowledge going forward so you can make the most out of your investments with no regrets!