Thinking of a retirement fund? Would property do the trick?
Those of us who do not have a pension from work need to be pretty creative in planning our retirement. One of the ways to be creative in the long term is investing in property.
Now, if you own your own home that may be an investment. As you age, you might decide to move and then you can sell your home, hopefully for much, much more than you invested in it in the first place. You can save that money and use a little bit of it for an apartment. However, you may decide to stay in your home, in which case, that money stays tied up in the home.
You can purchase a home with an apartment or a suite. Around here, that is very popular because homes are very unaffordable without suites. You rent out the suite and live in another part of the home, and that suite continues to make you money. The down side? You don’t get the full use of your home, and you always have someone living next to you. The up side is that you can take over the home as a whole or rent it out as you please, and you don’t need to make a new investment in property to have this suite – it’s built in to your current investment.
You can also purchase a second home or an apartment as a rental property. This poses a little bit more risk in the short term. If you decide you can’t afford this and prices fall, you could be stuck with the house. However, in the long term property does tend to go up. You can rent out the home for a payment that covers the mortgage (or almost), and when you retire, you will have used those payments to pay off that mortgage and the rent will now be a nice little retirement income.
Would you invest in property as a retirement plan?