Here's Why Senior Citizens Should Consider Real Estate Investment

Real estate investment is a long-term journey that not many tend to take. Given that it takes a heavy sum for investment and also, the returns could be either consistent or slow, real estate becomes a tricky choice. What about senior citizens who just retired and received a large sum? Can they think of real estate?

Real estate is not really a choice of many senior citizens who have ample money at hand and looking to invest it. While they prefer stocks, bonds and other investment schemes, why is it that they shy away from real estate?

• Most of the investors think that it is easy to invest and then move out of stocks and bonds.
• Investors above the age of 60 could not be well-versed with the movement of real estate market and may fear losing their money to a real estate downfall.
• Not only old, even the young investors find buying and selling the property a cumbersome process. Even in case of rental earnings, one has to maintain the property.

But, there is a bright side to real estate investment, too, if you are a senior citizen.

• In case you turn it into a rental property, you are getting a fixed income from the property every month.
• You can pass on the property to your next generation and they might earn good returns in the future.
• Even if kept for long-term, real estate market is likely to give you higher returns.

So, how is it that a senior citizen could invest in real estate:

• Invest in a property to rent out. This way you could have a property in your name and a regular monthly income as rent for times to come. In case you hire an agent who could help you find the right tenant, share tenant grievances and thus, help you make the required changes and upgrade the property. This property could later be used for personal use, be sold when the market is ripe or passed on to the next generation.

• In case, residential real estate is not on your mind, invest in the commercial segment. This is a better avenue to earn stronger returns. With this, you could lease the property for a long term to a commercial tenant and earn monthly income.

• Planning short term? You could think of investing in properties in smaller intervals. Upgrade and sell them. But, opt for this only if you are well-versed with real estate and can manage a portfolio.

• An indirect yet profitable way of investing in real estate is through REITs (Real Estate Investment Trust). Recently introduced in India, REIT can be a viable option for those who have Rs 2 lakh to put in. According to norms set by Securities and Exchange Board of India, or Sebi, REITs have to share 90 per cent of the profits with the investors.

• You could also collaborate with a bunch of investors and take a stake in a property and earn profits accordingly. This way you will not have invested a huge sum in one place, rather invest in multiple properties.

How much is enough?

Do not use up all your retirement money to invest in real estate. It is advised that only up to 10 per cent of your retirement money should be put in real estate, in case you are new to it. This investment could help you earn up to five per cent of profits annually on the money invested for long term, while in case of a rental property the annual returns could be greater than five per cent even after you have paid for the all the expenses including maintenance.

If you are ready to take the risk to earn healthy profits, direct investment should be your pick. 

Also Read: Features Senior Citizens Should Check Out Before Buying A Home