This summer Statistics Canada reported that the average retiree household income among Canadians is $45,000. For two people, or even one depending on lifestyle, that’s just simply not enough, leaving retirees trying to find other ways to supplement their income. But what options are good out of the many to choose from?
Investing is always the best route, as retirees don’t often want to enter back into the workforce, no matter how much they love doing what they do. But with so many different options for investing, which are the best for those trying to enjoy their golden years? Typically purchasing rental property just isn’t practical. After all, who wants to be heading out to make emergency repairs on a home that’s not even yours when you’ve already booked your 18-hole tee time? And who wants to be limited in their travel time when they have it, because they have to make sure they’re around for their tenants?
Becoming a landlord just isn’t really all that attractive of an option for those trying to enjoy their retirement years, but that first route isn’t the only one in being a landlord. Another option is to purchase a very large rental property, such as an entire apartment building, and then hire a property manager to manage all of those day-to-day maintenance fees. This makes it a very expensive option for seniors, who are often living on a fixed income to boot.
Investing in private second mortgages however, is the perfect way to invest and not take on any of that risk or hassle that you would with the other two options. When you invest in a private second mortgage, someone else buys the property altogether, meaning that they will always be the ones – the only ones – that will ever be responsible for it. Should something need to be fixed or replaced, it’s on the part of the homeowner – or the borrower – to fix it.
Investing in private second mortgages can give you a return from anywhere between 10-15 per cent, because these are the riskiest type of private mortgage investment and so, higher interest fees can be charged. However, your investment is still protected by the actual property, the home sitting on that second mortgage.
A second mortgage private investment gives you the best of all worlds when it comes time to invest as a retiree. While there won’t be much required of you and they are very passive investments, you will also get the most back from your initial investment.