Several months ago, I was speaking with an investor friend of mine, who had just picked up a nice duplex in a solid area of Indianapolis at a foreclosure auction.
“Are you going to keep it?” I asked, knowing that he owned several rental homes already.
“Nope. I’m going to flip it,” he said. “I’m too old to be buying more rentals.”
That hit me hard on a couple of different fronts.
One, he’s basically the same age as me. Too old… whaaatttt?
Two, does he have a point?
Is there an age when buying rental properties no longer makes sense?
After pondering this idea for a while, I’ve come to this conclusion:
There are benefits to buying rental real estate at any age. We represent some very young investors and we represent some investors who have been in the business 50+ years. Yes, more than FIFTY years.
However, I don’t think there’s any doubt that you receive the MOST benefit from buying rental real estate when you are younger. 
We preach it daily to our investors… owning rental real estate is a long-term proposition. The more years you own it – and some of those years will be difficult – the happier and wealthier you will/should be.
For this week’s blog, I thought I would break down 3 of the major age brackets, which come with their own sets of challenges and their own sets of perks.
To start, maybe the real question isn’t “am I too old or too young”, but rather, “what strategy would work best for my situation?”
Aaron Klatt, an Investor from Riverside California agrees that “Age is not the right question to be asking in my opinion, knowledge, financial stability, and comfort level with a given strategy are far more important.”
Related: The New Landlord’s Guide to Owning Rental Real Estate in Indianapolis
Investing in your 20s-40s
In your 20s, you may think that you’re too young to start investing in rental real estate. You may think that your lack of experience and current financial status may hinder you from purchasing solid opportunities.
That is simply not the case.
Quite the opposite really.
If you asked any older, wiser investor I could almost guarantee they would tell you that starting young is the best decision you’ll make and that they wished they would have started younger.
Jeffrey Holst, an Investor from Hixson, TN says: “My biggest regret in real estate is not starting sooner. I was around 30 when I bought my first property but had been considering doing it for a decade at that point. Now as I approach 40, I see clearly that had I started right away, I’d probably be living on an island now.”
Investing in your 20s, 30s, and even 40s, is such a great opportunity because you have an invaluable advantage: time. Time to build a portfolio, time to buy and hold properties, time to make mistakes, and time to watch appreciation build up year after year.
If you can get into REI during these years of your life, you’ll no doubt reap the greatest rewards.
Of course, there are different takes on this.
Massachusetts Investor Steve DellaPelle notes, “Enjoy your youth and don’t worry about the stress or headaches that come with REI. If you are under the age of 23, I would say not to go for it unless you are totally and completely ready for this huge change in your lifestyle. Once you are more established and mature, I would say shoot for the stars. I got in around age 24, now 25, and I think that this is an ideal age perhaps maybe even a little older at 26. It can set you up nicely for financial freedom and help build an amazing future but I believe it is not worth the cost of your early 20’s.”
Investing in your 50s & 60s
While starting young is ideal, getting into the rental property industry in your 50s and 60s is most definitely not a waste of time.
A lot of potential investors shy away from the idea of REI because they fear that since they don’t have 40 years to wait for their investments, that there’s no money to be made. That couldn’t be further from the truth.
Think about it, if you buy a few properties at 55 and plan to retire around 65, that gives you a solid 10 years to watch those investments work for you.
There’s real money to be made in investing, even if you don’t have decades to wait for a return. You’re strategy will obviously be different than someone who’s in their 20s or 30s, but there’s no reason why you can’t make just as much, if not more than someone who got started at a younger age.
It’s all about making smart investments that align with your goals.
That leads me to my next point, if you’re just getting into the real estate business at this stage of your life, don’t try to go it alone. Utilize every resource you possibly can. Find someone who will advise you on finances and properties. Of course you’re going to make a mistake or two, we all do, but you can’t afford to make as many as someone whose 25, so do yourself a favor and find a trustworthy mentor at the start.
If you’re worried about getting a loan, don’t be. You’ve got the law on your side when it comes to working with banks and lenders. You cannot be discriminated against because of your age. As long as you have a qualifying credit score and a good source of income, you can be approved for a 30-year fixed home loan same as someone half your age.
You also have a few advantages at this point in your life such as stable financials from longer time in the workforce, less family planning and uncertainty, and more real world experience.
When starting to invest in your 50s or 60s, it’s essential that you have a very clear strategy with ‘growth’ at the top of your priority list.
Investing in Retirement
This is where things can get tricky. By this point in your life, you’ve lost a good deal of the long-term appreciation potential, but you still have tax advantages and the potential for some cash flow.
However, purchasing rental real estate in your retirement can be a double-edged sword.
Some years, cash flow might be great. The home may have very little maintenance, the Tenants take great care of the property and choose to renew.
Then, life happens. The Tenant vacates, a new roof is needed, the HVAC system fails, etc. The cash flow you experienced in previous years is gone and you may even find yourself taking money out of your reserves to pay for repairs or unexpected expenses.
That can make your life stressful, which isn’t the goal of any retirement.
So, here’s my advice to retirees: Feel free to buy rental properties, but never, ever rely on them as your sole source of income. That’s a dangerous game and one that could have devastating consequences.
I’ve seen it and it’s not pretty. It’s tragic, in all honesty.
Again, I repeat, never – ever – take all your retirement savings and invest it all in rental homes, expecting a set return each month that you need to cover your basic expenses.
Because it most likely won’t happen.
T&H Realty’s Take
If you’ve read about us, you know that we began purchasing investment properties in our late-20s. My business partner and I both owned our own homes, had established our normal retirement accounts and decided purchasing rental properties was something we wanted to explore.
Fast forward more than 17 years later, and we have no regrets. In fact, we’re thrilled with the results.
It hasn’t been easy. I hate to keep tossing around the same cliché, but it’s been a grind at times.
But, again, no regrets.
Are we still buying properties? Not actively. If a good deal came around that made sense for us, we would definitely consider it.
Wherever you are on your property journey, it’s important to consider where you are financially now; where you wish to be financially when you retire; and the time frame that exists between now and then.
Happy investing… no matter your age.
