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A Guide to Investing in Real Estate before retirement

PropertyAccess Team |

Planning for retirement is not usually a topic most young adults talk about. It can even be argued that many people avoid the subject altogether. Nevertheless, real estate companies constantly encourage their clients to take a closer look at how to use this asset to improve their financial future.

What working professionals need to recognize is that real estate is a long-term but stable passive income. This means that investing as soon as possible directly impacts one’s retirement plan. Unlike other investment assets, real estate typically is independent of potentially damaging economic and political trends. A recent analysis by the Santos Knight Frank company, formerly CBRE Philippines, has concluded that the Philippine real estate market is only set to grow even further as the economy matures. Taking all these into consideration, it would do well to begin investing in local real estate now.

Thankfully, there are a few strategies and tips that will help.


Diversification is key

Real estate is one of the more versatile investment opportunities out there. In essence, investors earn passive income through rental payments but these can be procured in different ways. The most obvious -- and perhaps most practical -- is to invest in an apartment or studio and lease these out to other working professionals. For example, a studio for rent in BGC, such as Avida Towers Turf, would attract a lot of potential clients, as would a condo for rent in Makati, such as Avida Towers Asten. Remember that location is always important when investing in real estate for passive income. However, as mentioned, one isn’t limited to just apartments. A house and lot in Nuvali, such as Avida Southfield Settings, for instance, can also be an ideal income-generating asset. Mixing and matching in real estate is recommended so that the investor is not reliant on only one asset.


Understand that this is a commitment

Regardless of how early (or late) one begins investing in real estate for retirement, it must be emphasized that returns would not be seen immediately. Those who are expecting a “get-rich-quick” scheme will be heavily disappointment. Taking aside the concept of “flipping” which will not be discussed here, real estate traditionally yields returns on investment several years after the fact. However, what it lacks in punch (as it were) it makes up in stability. This is the main reason why it is considered a crucial aspect to any retirement plan. Consider this: working professionals are secured by their knowledge that they are paid their due every pay day. When they are no longer working, this stability becomes non-existent. As an added cushion, a passive income-generating asset such as real estate is a wise decision.

Research

Real estate professionals all agree that investing in the market is the correct decision. Where they differ is what type of real estate should be invested in. Note that the earlier strategy focused on diversification. For the most part, this is the suggested course of action. Nevertheless, each real estate investment must be made with a certain amount of research. Investors should speak with the real estate professionals before making any decision. Real estate investment is a big decision and needs to be taken seriously. Some people may prefer to have several apartment units, while others may opt to follow the technique described earlier of true variety.


Take note that retirement is a milestone that all professionals will experience. While it may not be a particularly fun topic to think about, planning for it now will ensure a more stable financial future.

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