Real Estate mistakes are always costly errors, but they are especially hard on retirees. Without a regular income outside of savings and social security, many rely on real estate as a source of wealth and security. Knowing how to use your real estate property intelligently is a crucial aspect of a secure retirement. Here is a look at three of the biggest mistakes you can make.
The 3 Worst Real Estate Mistakes:
1) Moving during retirement without due diligence: Many plan on moving after they retire, to downsize and save money, move to a dream destination or be closer to adult children in other cities. While it’s true that downsizing or moving to a more affordable location can save money, it’s also important that these decisions are made carefully and with a consideration for the long-term. Generally, it’s unwise to move to a new city simply because children live there. After all, there is always the possibility that children might move again. You have to plan for the long-term. Additionally, retirees who downsize often find themselves in a community that they do not enjoy. Be sure to spend plenty of time in your prospective area. Be absolutely sure it’s right for you before taking the plunge. Finding yourself in an uncomfortable new home could potentially lead to an expensive relocation down the road.
2) Assuming your home will gain value: Many don’t save enough because they are counting on their homes as a guaranteed source of growth. The Great Recession should serve as a strong reminder that this is not always the case. Real estate prices are irregular, and costs in maintaining the home often cut into potential earnings from increased value. Of course, many people earn money from their homes, but do not count on this as a reliable source of new wealth. Know the market is unpredictable, and budget accordingly.
3) Not studying home equity: There is a diverse range of options for how to tap into your home for the liquidity you need. These include selling, downsizing, reverse mortgages and many other options. Some of these methods can lead to financial trouble down the road, while others can help create a better economic situation during retirement. The right choices will depend on your personal financial needs and means. It’s crucial to put in the time and research about these options
Knowing how to handle your real estate can be a great step towards a financially secure retirement. As you move forward into the next step of your life, be sure that you have the counsel and research behind you to make the right choices.
Garland & Mason, L.L.C is a firm of business and real estate attorneys with a passion for helping their clients achieve financial success.