Is investing in the real estate market a good idea as a retirement plan? No doubt, many people have significantly benefited from making this decision. However, like anything else in life, nothing is guaranteed. Unfortunately, there will be people who will see little to no return on their investment. It takes skill and intuition to invest in the real estate market, and overall the guts to place all your bets on it. However, it is still important to know a few things before placing your retirement on the line.
Lots of Work
When people bring up the fact that they have a real estate portfolio, they often leave out the hard work behind it. Unlike stocks, homes overtime begins to deteriorate and must be taken care of. Even if you do have tenants within your properties, it is often the responsibility of the owner to fix any issues with the home. This can be both a very labor-intensive and costly experience if you wish to partake in real estate.
A Volatile Market
Needless to say, the real estate market is a very volatile market to engage in. We only have to look at the housing crisis of 2008 when prices plummeted to an all-time record low. Many homes worth millions suddenly lost over 80 percent of their value over a few days. This is even truer overseas. Panama is a popular choice for retirees, but the Panama real estate market requires different tactics than the US one, so you can quickly find yourself overwhelmed. The real estate market can produce hefty rewards for people wanting to use it as a retirement plan, but you must always take into consideration the risks equal to rewards ratio.
Intuition Plays a Huge Part
In continuing the conversation of the 2008 housing crisis, many of the so-called real estate gurus were quietly removing themselves from the market around the ’06–’07 year. This is because their intuition was telling them that something bad was coming, and maybe they should remove themselves from real estate for a few years. This form of intuition is something even season veterans are still attempting to master themselves. Therefore, it is crucial for people wanting to add real estate into their retirement plan to understand the need to build this skill beforehand.
Entering the real estate market for the goal of obtaining a comfortable retirement life can be one of the best decisions you can make. Real estate can provide you with quick and large rewards. However, one should understand the enormous risk to reward ratio that is required. It is recommended to adhere to the list above to make an educated decision on whether or not you should place your retirement in the hands of the real estate market.