Defining wealth is a difficult subject, what one person considers being true wealth is irrelevant to another. For some it is having an almost limitless pot of wealth, whilst others see wealth as having enough to live comfortably and a happy, healthy family. Whichever way you view it, wealth is a necessary part of life, owning your own real estate can make it much easier to enjoy the later years of your life:
Keep an eye on inflation rates
Inflation is a fact of life, everything you purchase increases in price year after year. This means that if you choose to rent a property the rent will increase over the time you live in it. However, if you choose to purchase a property you will eventually own the property outright and not need to pay rent. This will make it far easier to afford to retire.
There are many of reasons why interest rates can go down, it can be a response to natural disasters, a terrorist attack or political issues. Lower interest rates means it is possible to refinance on your real estate purchase and benefit from lower rates, saving yourself money!
Tax benefits for landlords
There are a variety of tax benefits available to anyone who owns a property. Mortgage interest can be deducted from earnings, there are options to defer taxes and even tax free allowances for couples and newly-weds. A tax advisor can help advice you of the best ways to reduce your tax bill and save on your investment costs. The savings can be substantial.
Managing real estate
Stocks and bonds are the traditional investment vessel of choice for many people; this is partly because it has always been used and has a proven track record for providing good results; particularly over long periods of time. However, many people do not understand the stock market and do not wish to invest their funds into something they cannot see or manage. Real estate offers a hands-on approach which can be managed by anyone. It is possible to manage the property purchase, repairs, maintenance, tenants, location, budget and even real estate growth. This makes the idea of real estate investment a realistic possibility for anyone, no matter what age you are.
Selling property – abides by the rules and don’t take unnecessary risks
Dips in the economy can have a drastic effect on the price of shares and cause people to quickly sell their stocks, reducing the price even more. Real estate is harder to sell, particularly when the market is in a slump; this means you are more likely to hold onto it for the long term and generate the returns and retirement income that you need.
Finance on a real estate purchase has to be repaid over many years. However, if you get a good, fixed rate finance agreement you can actually end up paying the same amount ten years after you started paying even though inflation has risen and your funds are not worth as much as they once were. In effect your loan repayment has reduced!
It takes time and effort, as well as finance, to get an investment property up and running. However, once you have a tenant in your property and the repairs and maintenance are all completed there is very little to do on a day to day basis. This makes real estate an ideal retirement income option as it requires minimal effort and can generate a reasonable amount of income. This income can be multiplied by purchasing additional properties.
Contrary to popular belief, real estate can be the ultimate asset for retirement. However to make it in this business, you have to make sensible decisions. If you’re new to the property investment domain, ask for assistance. The right financial planner will help steer clear or bad deals. Investing in real estate in your senior years is an important decision; you have to realize that your savings are at risk. You can’t afford to lose. Always remember that what looks appealing on the outside may have a lot of flaws on the outside. Don’t let an attractive property fool you!
By Peter Smith and PropertyTurkey.com!