Real,Estate,Good,Retirement,In finance, share, loan Is Real Estate a Good Retirement Investment?

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Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4 st1\:*{behavior:url(#ieooui) } /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; mso-bidi-font-family:"Times New Roman"; mso-bidi-theme-font:minor-bidi;} Real estate can be a good retirement investment for some people. For the average person or couple though property can be of the worst retirement investments around. The reason for this is all the added expenses associated with real estate.   The Cost of Real Estate Ownership The reason real estate is often a poor retirement investment is the cost and hassle associated with it. Beyond the initial investment and income taxes it often costs little or nothing to own most investments including stocks, bonds, mutual funds and annuities. There are also some big tax write offs associated with tax-deferred retirement vehicles such as IRAs and deferred annuities.   As every property owner quickly discovers it costs money to own real estate. There are taxes, maintenance costs and repair costs. In most parts of the US all property including vacant land is taxed. Even though there can be tax breaks for home owners there are often no tax breaks or refunds available for people with investment property. Another problem is that the amount you pay in property tax often equals or exceeds your deductions.   Taxes are only the beginning of the expenses you will face. Other costs include insurance, utilities, home or property owner’s association fees, repairs and maintenance. Something many people forget is that you have taxes, insurance, utilities, maintenance and other expenses on rental property whether it is rented or not. A rental property that sits empty will cost you money.   Hassle from Real Estate If you plan to own rental property you will have to deal with the hassle. Are you prepared to deal with tenants and the problems that they can create? When you own a rental you have to take time out from your other activities to screen tenants, collect rents and perform other chores? Are you prepared for the unpleasant experience of evicting a tenant?   There is maintenance even if you are handy with tools are you willing to spend your golden years fixing up properties. You also have to consider maintenance and repairs when you get older and cannot perform those chores anymore. There’s also the question of who will take care of the property if you go on vacation or get sick and end up in the hospital.   Yes there are maintenance and management companies but the fees they charge are an added expense that can eat up your profits. A management company will charge you whether your property is rented or not.   The Real Estate Market A big expense that many people fail to take into account is selling or disposing of real estate. Stocks, bonds and mutual funds can be sold with a simple call to your broker or a visit to a website. Selling property is a complex process that involves advertising, realtors, paperwork and legal hassle. Selling property also takes time it can take months or longer to find a buyer.   There’s also the possibility that property values will fall and you will not recover your investment. If you have to sell a property quickly you may have to settle for a fraction of the value. If the real estate market crashes as it did between 2007 and 2010 you might have to sell a property for a third less than you paid for it. So it is entirely possible to lose both the purchase price and other investments you made in a property.   The truth is that real estate is simply too risky and too expensive a retirement investment for the average person. Unless you have a lot of disposable income or a partner that can help with the property you would be well advised to put your nest egg in annuities, IRAs, CDs or the stock market.