Today, many Americans are lacking the funds that they need to have a financially stable retirement. Most retirees are looking for a reasonably steady and mostly predictable stream of income as a result. When it comes to retirement, having multiple sources of income is ideal.

So is real estate a good way to generate strong returns for retirement? In short, yes. For those looking to add to their retirement income stream, real estate investing is an option to consider.

Keep in mind that investing in real estate isn’t like writing a check to a mutual fund company. This one requires legwork, maintenance and perhaps a few headaches along the way. Hard work is required whether you own a rental property or have a new career in house flipping.

But if the retiree is willing to roll up their sleeves and invest time along with money, they may find real estate could be that other path towards having multiple streams of income.

Rental Properties vs. Flipping Houses

There are two types of income. One income is known as passive income, the other is known as active income. Active income is what most are used to. This is day-to-day involvement and work that generates money. Also known as a job. Passive income is earned without requiring too much effort.

Owning a rental property is passive income.

Every month a check comes, with minimal effort from the owner. When it comes to purchasing a rental property and beginning your real estate investment venture consider starting small, picking a desirable location, and choosing tenants carefully.

Houses with three bedrooms, two bathrooms in a good neighborhood, in a strong school district and in good shape are the most desirable from a renter’s perspective. In addition to being located in a good neighborhood, consider a rental property nearby for convenience. Lastly, tenants will need to be properly screened, including credit and criminal background checks and referrals from past rental property owners.

Flipping houses as an additional source of income will require a greater amount of time and work compared to rental properties.

Flipping houses needs to be looked at as a business. The income you earn is impacted by the time and work put into flipping a house. If you have a lot of spare time and don’t want to sit around, flipping is a great way to earn money, work in real estate, and take up your time. Compared to other real estate investments flipping houses can be a more gratifying process.

Both rental properties and flipping houses have their own pros and cons. What they have in common is being an additional source of income throughout retirement.

Investing in real estate should be considered for those wanting more cushion during retirement. Take the time to consider all aspects carefully before jumping in.