Residential property has been an extraordinarily strong investment since the mid-1990s. Many property investors have started with one or two properties only to eventually wind up with a portfolio consisting of dozens (or more), all of which generated residual monthly income. They set up their retirement by developing a portfolio they could eventually sell for millions.

Of course, not everyone who invests in residential real estate becomes a millionaire. But that does not mean residential property isn't a worthwhile investment. It actually is. More importantly, there are three ways you can use property as a retirement vehicle.

Housing Will Always Be in Demand

Before we get to investing in residential property, let us discuss why you should. It boils down to one simple fact: housing will always be in demand. As long as people roam the earth, they will need houses to live in. They will need houses even if the stock markets crash. They will need houses even if gold eventually becomes worthless.

Another thing to remember is that rental housing will always be in demand as well. There will never be a day when every house is owned by the person who lives in it. Therefore, there will always be room for investors whose business revolves around residential rentals.

With that out of the way, let us get to the three means of using residential property as a retirement vehicle. If you are already over 50 and looking to supplement your current retirement savings, you can do so with property. You are not excluded because of your age. However, you might want to think about getting specialised mortgage advice for over 50s regardless if should you choose one of the first two options.

House Flipping

House flipping was all the rage during the late 1990s and early 2000s. It was fuelled by continually rising house prices that were capable of making investors wealthy in short order. Investors would buy cheap, rundown houses that needed modest renovations before being put back on the market again.

This strategy is not as popular today as it once was, but it is still viable if you know what to look for. The goal is to turn properties around as quickly as possible. The sooner you can sell, the more money you make with flipping. How does it work?

You search for off-market properties, these being foreclosures, short sales, etc. Even auction houses are good for this purpose. You then do the necessary renovations to get the houses ready for sale. As soon as they are ready, they go back on the market at a price high enough to cover your purchase, the cost of renovations, and your desired profit.

You obviously do not want to still be flipping houses in retirement, so the goal here is to take your profits and put them into low risk investments. Bonds, precious metals, and annuities are all good choices.

Become a Landlord

Your second option is to buy residential properties as a landlord. This may be easier if you do not have the money upfront to start flipping. Fortunately, buy-to-let mortgages are fairly common in most parts of the developed world. You can mortgage a purchase, then use monthly rental payments to pay off the mortgage and generate a profit.

The key to making this strategy work is identifying the best houses to buy. Again, you are looking for off-market properties in locations where demand for rentals is high. The beauty of this strategy is the residual income it generates.

Let's say you take out a five-year mortgage. Let us also say that you realise very little profit in those first five years. That's fine because your rental income will be almost entirely profit once the mortgage is paid off. Hold onto that property for the next 30 years and you will enjoy years of residual income.

Invest in a Property Fund

Last but not least is the property fund. This is a good investment for people who want the advantages of investing in residential property without the risks of flipping or the work of being a landlord. A property fund is a fund that pools investor money for the purposes of purchasing large volumes of rental properties.

In such a case, the fund itself would own the properties and act as the landlord. Profits generated by the portfolio would be returned, in part, to investors as dividends. In this regard, it is a lot like investing in mutual funds. The big difference is that a well-managed property fund can usually generate higher returns than you would expect from mutual fund securities.

Remember that property will always be in demand. Also, bear in mind that property generally appreciates over time. There may be ups and downs in the market but, over decades, property is almost always worth more down the road. That is what makes it such a worthwhile investment.