Why real estate is a good retirement investment
The majority of people have their own vision of what their perfect retirement should entail. It all comes down to a period when employment is optional and there is a steady stream of income from many sources. Real estate is an essential source of income that most individuals neglect owing to certain misunderstandings. The majority of individuals feel that the barrier to entry into real estate is too high, therefore they don’t bother to attempt.
The issue remains, though, whether real estate is a viable retirement investment. It most certainly is, and many people have built a comfortable lifestyle by amassing a real estate portfolio.
Experts have the following to say about it:
“Among all the private investment opportunities, real estate typically outperforms other asset classes and is usually less volatile,” said Brian Dally. “In addition, people are familiar with the idea of land and home ownership, so real estate investing isn’t overly complicated to comprehend.”
“Real estate can be a great asset class and diversification tool,” said Jeffrey Feinstein. “It’s typically not directly correlated to the [other financial] markets and can provide income from rentals or refinancing. The average hold period is around four to 10 years, so it can be looked at as a long-term, retirement-friendly strategy.”
According to Eric Rosenberg, “When thinking of retirement through real estate, the Holy Grail of real estate investing is passive, buy-and-hold properties. Most people I’ve met with serious wealth own buy-and-hold real estate properties like apartments, commercial properties and land”
So, what can you do to ensure that your real estate portfolio is in good shape and will make you happy once you decide to retire?
- Boost Your Real Estate Knowledge
Like any profession, to be good at it, you have to know what you are doing. You can turn real estate investing into a profession that allows you a lot of free time, but be ready to invest years and patience.
There are plenty of seminars advertised on how to invest in real estate, and while some are probably decent, others will end up costing you a lot of money for nothing more than a lot of office binders. If you are serious about turning real estate into a good investment, start by reading books on real estate investing written by a reputable expert such as Danbel’s Realtor Handbook which gives both real estate consultants and investors a great beginner’s guide to real estate for FREE. See the link below to download the book.
- Polish Your Skills
There are numerous ways to invest in real estate. Some choose to speculate, looking for a piece of land they can buy and hold (land-banking), or a house they can remodel and quickly sell in a rising market. Others consistently look for income-producing properties; either commercial office space, apartments or duplexes, or residential homes they can rent out.
Assess your skills and available capital to determine how to go about choosing your first investments. You cant have a capital of N5Million and be looking for real estate in VI, Lekki, Ajah, or dare I say, even Sangotedo (except you are willing to go through the dreaded route of dealing with Omo Oniles which is not recommended for beginner investors)
- Develop Your Intuition
There are two sayings about real estate that you have most likely heard. The first one is “location, location, location.” It’s true. You need to have an intuition about what areas of town might become popular, and which areas to stay away from. In a slow economy, rental real estate properties in solid locations will remain in high demand. However, don’t jump into buying a piece of property unless you’re familiar with the area.
The Bottom line
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 real estate portfolio.