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Why Rental Income For Retirees Is Risky
Senior citizens and property management responsibilities can be a bad mix, say some advisors. By Ben Mattlin
REAL ESTATE IS A VITAL PART OF AMERICANS’ ECOnomic lives, making up some 28 % of the net U. S. household wealth, according to the Federal Reserve— a hair’ s breadth behind equities, which account for roughly a third. Perhaps it’ s not surprising, then, that many clients consider rental income a potential source of money in retirement.
Steven Podnos of Wealth Care in Cocoa Beach, Fla., is one advisor who doesn’ t generally think it’ s advisable.“ It’ s crazy, for most people,” he says.
In more than 20 years as a financial advisor, he’ s only rarely seen rental property succeed as an investment, he says. The return on investment is too low, he explains, and the demands on time, energy and money are too high. A few families who can devote a full-time effort to property management and have the capital to accumulate multiple locations might have a chance of success, but it’ s definitely not something he would ever recommend.
That doesn’ t stop some clients from thinking about it, though.
And even advisors who don’ t typically recommend rental income for retirees acknowledge that it’ s occasionally an attractive opportunity to consider.“ Rental income can be a great source of additional income,” says Nicole Carson of 2nd Story Wealth Planners in Philadelphia.
What do you say to clients who want to make rental income a part of their retirement plan? It depends on many variables, advisors say. If the clients don’ t already own the property they hope to rent, experts suggest getting them up to speed on what’ s really involved in becoming a landlord.
The risks are legion. Tenants don’ t stay forever, so there could be constant interruptions in the income stream. Tenants furthermore don’ t always pay their rent on time. Sometimes they harm the property. Even if they’ re great renters, the normal wear and tear on the property is costly and that need for maintenance reduces its profitability.
“ Most folks want simplicity as they get older, and rental properties tend to be more of a hassle,” says Kendell Frye, a certified
50 | FINANCIAL ADVISOR MAGAZINE | SEPTEMBER 2025 WWW. FA-MAG. COM