Remember that scene in "It's a Wonderful Life" when George Bailey is on his (mis)adventure in a world into which he was never born? Well, on of the stops was a Ma Bailey's "boarding house." It seems the boarding house idea is making a comeback for some retirees to make a little extra income by putting their erstwhile empty rooms to work.
In today's rough and tumble economy, it seems that everything old is new again… albeit with a bit of a twist. Years ago, it was common for older couples – and frequently widows (e.g., Ma Bailey) – to rent out rooms for extra income. Taking in boarders was a viable way to supplement income.
The past is now the present, as Baby Boomers face the cold, hard facts of retirement. Increasingly, they are changing the definition of "retirement" to include at least some form of work. While you may not be ready to post a "Rooms for Rent" sign on your home, you might consider becoming a landlord. In fact, the venerable Wall Street Journal writes that it may be just the e-ticket, especially given the uncertain prospects for stocks and bonds (not to mention the meager interest rates on time deposits).
Think about it. It's a buyer's market now and purchasing a multi-family home is more financially feasible. Moreover, the trend toward the renter's lifestyle is picking up steam. All this means you have a low cost of entry into a market that's only expected to expand. Starting to make investment sense?
Sure, it's a career of sorts, but you also need to think of it as an investment. Weigh everything in the short term, including start-up and maintenance costs, as well as the marketability of the location you're considering. Nevertheless, keep your long-term goals in mind, including appreciation and eventual sale. Buying in a depressed market, after all, is only a steal if that market bounces back. Finally, don't overlook the possible danger of having all your eggs in one basket, since being a live-in landlord will unite your home, equity, and employment, into one potentially risky asset.
Like any retirement move, don't make this one too quickly. Discuss your plans with a professional who can help you sort out the details, including how an investment rental property could affect your Social Security benefits. Remember, too, that this lifestyle may not suit you. [Can you say "3 a.m. tenant calls to report an overflowing toilet"?] In which case, you would be wise to explore other, more enjoyable options.
Reference: The Wall Street Journal Online (June19, 2011) "Want a job? Become a landlord."