As a retiree-to-be, you want to have financial security. You want to have the sort of income that takes the least amount of effort to earn, yet still allow you to live the rest of your life comfortably.
One of the best investments for retirees is property. While it’s certainly not the cheapest investment available, the long-term ROI more than makes up for it. Also, there are other reasons why you should use property to secure your retirement.
You Earn Passive Income
If you own a piece of property, you can rent it out to tenants again and again. That’s possible if you know how to be a good landlord.
Also, property can hedge against future inflation and a low-interest rate environment. Right now, home loan rates are going down and property values are going up, making property a perfect investment.
You Can Hedge Against Emergencies
Whenever there’s a major natural disaster, a geopolitical risk or a radical attack, investors tend to move to safer assets. And property is significantly safer compared to other investment options.
For one, property values tend to appreciate. As the demand for living spaces goes up, and the amount of livable land goes down, prices move upward. Even if economic conditions are less than ideal, you can still find a way to make money off your property one way or another.
You Can Give Your Loved Ones A Solid Investment
Worried about leaving your loved ones in a precarious financial situation? Considering that property values follow a general trend of rising over time (as evidenced by National Association of Realtors data from 1968 to 2004), you have the option of turning over management of the property to family members, and have them reap the benefits thereof.
For example, you can teach your loved ones how to find tenants. You can teach them what to look for, what to avoid, and how to treat tenants so that they’ll keep coming back to you. Best of all, you can teach them good money habits. The rental rate may be high, but they’d better take care not to let unnecessary expenses creep in!
You Can Use Property To Leverage A Bull Market
In good times, assets appreciate faster due to rising corporate profits, increasing wages, and better employment rates. Real estate, in particular, tends to benefit from a bull market. With more people having a higher disposable income, you can expect an influx of prospective tenants who are financially stable.
You Enjoy Tax Benefits
When you’re a property owner, there are special tax incentives available to you. In the U.S., for example, the government has reduced interest on mortgage, deferred taxes through the 1031 exchange program, and offered a generous tax-free gain for singles and married couples.
Although using property to secure your retirement has all the aforementioned benefits, you still need to be careful. You need skill, knowledge, intuition and guts to invest in real estate. If you want to try out this type of investment, but you’re not sure how to get started, let a property management expert help you.