The term “retirement” always prompts us to think about how we will live during that phase. But before we consider our lifestyle, shouldn't we first think about how to generate enough income for our retirement years? Clearly, relying solely on savings from our salary won't suffice. We need to explore additional avenues, and investment offers various options such as stocks, funds, gold, and real estate. Today, TerraBKK will introduce “investing in real estate” as a way to prepare for “retirement” without taking on excessive risk, as retirees typically want to avoid risks and also need to set aside funds for medical expenses.

                Today, we will discuss the topic of real estate investment, specifically buying for the long term until retirement, rather than purchasing properties for short-term speculation. Here are some key points:

  • Have more than one property in your real estate portfolio.
  • Choose properties in different locations.
  • Invest in properties at different times.
  • Invest in various types of properties, such as condos, townhomes, and land.

The reasons are as follows...

  1. If you invest in only one property, such as renting out just one condo, the rental income may not cover your expenses. If that condo has issues and cannot be rented out, it means the vacancy rate = 100%... stressful, isn't it?
  2. Even if you own multiple condos, if they are all in the same location and that area happens to be declining, having several condos won't be beneficial. If that location is truly in a downturn, it will affect all your properties there. Therefore, if you plan to buy multiple units, they must be in different locations as well.
  3. Diversifying your investments is not a bad idea. Many modern investors tend to focus on what they like or are good at, which is fine, but for long-term investments aimed at retirement, it's advisable to invest in various types of properties to attract a broader customer base. For example, consider buying condos, townhomes, and land, as different customer segments will be interested in each type.

However, investing in real estate for retirement is not without its downsides... Let's look at the disadvantages and see if we can still handle them when the time comes.

  • Constant maintenance and repairs. Right now, while we still have the energy to manage and fix things, it may not seem like a problem. But think about the day when we grow older. Will we still be able to handle repairs? At that point, we might need to hire professionals instead.
  • Low liquidity. If you suddenly need cash, real estate is not something you can sell within 1-2 days; it can take years! Therefore, plan carefully. If you have properties, make sure you also have some cash on hand.
  • Problematic tenants. You may encounter troublesome tenants at any time. As they say, good tenants are harder to find than good stocks. If you end up with a bad tenant, it could be a headache for years. When we are older, will we still have the energy to deal with these troublesome tenants?

                In conclusion, investing in real estate is a solid option for long-term investment in preparation for retirement, as it can eventually become a source of passive income in the future. However, every investment carries risks. Following the recommendations from TerraBKK can help mitigate those risks... but it’s not everything. A truly good and correct investment should “diversify as much as possible” across stocks, funds, bonds, and real estate in varying proportions. This is what we call the least risky investment --- TerraBKK

Article by: TerraBKK Investment Tips

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