U.S. real estate is an excellent vehicle for building retirement wealth. It has superior long-run risk adjusted returns relative to more liquid assets and provides a hedge against inflation. Because it is a hard asset that produces relatively stable cash flows (regardless of stock and bond market conditions), property values are generally more stable than securities. While bonds also produce stable cash flows, real estate, unlike bonds, generates cash flows that rise with inflation. While an increase in inflation causes bonds to decrease in value, an increase in inflation causes the reverse with real estate, an increase in property values. |
However, there is no free lunch and real estate investing is no exception. Real Estate is much less liquid than securities. It can take months to sell a property and transaction costs are high. For these reasons, an investor should maintain sufficient liquid assets so that the likelihood of needing to sell is minimized. Kensington Realty Group suggests a 10-year investment horizon. |
If you are retired or nearing retirement and have a significant amount of wealth tied up in real estate, you should consider selling to preserve your wealth, provide liquity and increase your income. Kensington Realty Group will represent you with the goal of maximizing your investment return.
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