Is Real Estate Ever A Wise Investment For Retirees?

[renatusus]

Making money in real estate is no easier than it is in the stock market. It requires a lot of work, patience, and in some cases a lot of luck.
just want to ask a question about future planing .

Is Real Estate Ever A Wise Investment For Retirees?
please contribute with solid answers.
Thanks

[campbellsimon]

Investing in real estate for retirees can create passive income that can supplement pensions and social security. It can also give retirees a "hobby" if they decide to manage their rental properties.

There is some risk here. I would never recommend breaking into 401k or other retirement funds because if the transaction fails - so does the money that is necessary to live on. Another issue can be financing. 

[Moses O]

For those retirees who don't enjoy managing property they can have property managers take care of that.This would make real estate a 100% passive income which might be what they are looking for, so they can spend their time on their hobbies.

[Estrogen Hostage]

I just got done visiting with my parents financial adviser about the same topic. He want to sell their commercial real estate, but it's paid off and could easily generate a 12-15% return. They have never lived on the return, always reinvested profits. That said, they could easily just park it and the return is more money than they currently make. I think it's a no brainer to keep it.

[Triple G]

I HOPE SO!  I retired last year and acquired my second rental property.  I am currently looking for a third.  The shaky state of most retirement funds almost require you to have a backup plan to supplement or replace current retirement receipts.  On my first house I did ALL of the repair work  and I still enjoy doing small repair jobs but don't enjoy my butt above my brow.  There are plenty of younger more agile guys that need and appreciate any work I send their way as I get older.  It is a bit of a hobby for me, however the two houses I own generate almost $1500 net a month.  Since I don't currently "need" those funds, I'm looking to use what I've accumulated over the last year as a down payment on a third house. The house I'm currently evaluating would generate about $300 per month positive cash flow.  I've read of several individuals that didn't even start investing in real estate until well into their retirement years and still managed to accumulate a tidy estate. Bottom line, only you can make that decision.

[campbellsimon]

I just got done visiting with my parents financial adviser about the same topic. He want to sell their commercial real estate, but it's paid off and could easily generate a 12-15% return.

I am always shocked when I hear financial advisers encouraging their clients to sell their real estate (especially if it is paid off). Financial advisers that are pushing stocks and bonds (as a broker) are not the best to ask about real estate. But it is real estate investment that survives in constancy as stocks and bonds float all over the board.

Honestly, I wouldn't sell the commercial property at all. I would live off the income and include the property in my children's will.

[Randyscott]

With real estate price gradually increasing I believe it is a great time for buy and hold investors!  The average home price as a whole in the US was up about 7% last year and that is far better than the banks.  Plan an exit strategy and invest wisely.  We have gone to renting furnished rentals to companies and this has been an added bonus of income.  It seems that the more you charge for rent the better people tend to take care of them.  Defiantly hold the commercial property!

Randyscott

[campbellsimon]

I totally agree with Randy except on the exit strategy. If you are buying a property to support retirement, then I believe that the exit strategy will be the heir's problem, not the retirees.

Before investing in income properties, it is good to understand how to analyze a property's profit and loss statement. It is absolutely necessary to make sure the property can support a positive cash flow. If not then the investment will be more of a burden than a help.

[Bluemoon06]

Campbellsimon is correct. The thing that retires a person is income.  Nobody retires because they have a big pile of money.  The pile is never big enough because it doesn't solve the problem needed to retire.  You only retire when the passive income covers your bills.  That means that you have to have cash flowing properties.  You never buy a property that doesn't cash flow for retirement or any other reason.

You take deprecation ro offset income to make the income tax free and when you execute your exit strategy (die) your heirs inherit at the stepped up value so they don't have to recapture the deprecation so you never pay the taxes.

[heartlandbuyshouses]

Nothing is 100% guaranteed and some unfortunate people lose their shirt, and everything else along with it. It takes a certain amount of knowledge, skill, intuition, and guts to invest in real estate. If you have these characteristics, and you do it right, real estate can be a great investment.

Real estate can be a good investment if you educate yourself and go about it the right way. If you want to use real estate to build a steady source of retirement income, exercise patience and work systematically as you build a portfolio of income producing properties.​