Some may say this is a problem, but I believe it is a great opportunity. Unfortunately, I have seen over the years so many people retire and not be able to survive on the amount they had stock piled in an accumulation account (mutual fund, traditional retirement plans) which is negatively impacted by fees and by market conditions. Generally, with an accumulation account the owner draws upon the amount remaining depleting the account over their lifetime.
People who refinanced or financed into low rates now have the opportunity to build equity quickly and can use the real estate as a an alternative retirement vehicle. They can in fact rent the property out having the tenant pay the mortgage and still have cash flow to provide for living and traveling. Renting the property provides housing for those that can't purchase. So it is providing a service to a much needed population. Yes, the owner may need an alternative residence but the rent from the first property can help with the expense of the new living accommodations.
So, people who are looking to downsize in retirement now have an asset that has cash flow where the principal is preserved for them for later in life. Real estate, unlike stocks and mutual funds, normally retain its value and grows over time and it can provide monthly cash flow (passive income). Market conditions generally do not create substantial losses. Cash flow is the key to being able to live with financial flexibility.
There are many ways to create solutions-leases, lease options, contracts for deed, seller financing. Each option depends on the situation presented of course.
We can certainly provide guidance on potential options for both homeowners and potential buyers.
#cashflow#retirement#realestateinvesting
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