In the case of real estate as a retirement provision, a distinction must be made between owner-occupied real estate, the home that many people aspire to own, and real estate used by others, such as a rented condominium. Condominiums as capital investment have their special attraction, since regularly renting incomes are obtained, and thus a lasting age income can be generated. It should be noted that the property is in a good state of renovation (at least core renovation) and is located in a good residential area of a growing city. In good residential areas, rental income increases in percentage terms over the years when tenants change.
Moreover, condominiums for retirement provision in good residential locations become increasingly valuable over the years, as the value of real estate usually increases disproportionately to inflation. Anyone wishing to purchase a condominium as a retirement provision should note that the yield calculation includes not only the financing costs, but also the costs of management (rental management and condominium management), the expenses for the maintenance reserve and an imputed unit for any vacancy that may need to be bridged.
Although the real estate market is subject to fluctuations in value from time to time, you are spared the violent swings of the stock market. Just looking at the stock markets in recent months, when even supposedly safe "people's stocks" often lost more than half their value, investors learn to appreciate the security of a quality property.
• a good return on investment,
• tax advantages and
• a high level of investment security
Compared with interest-bearing forms of investment, real estate leased to third parties generally offers a long-term yield advantage when rental yield and value appreciation are considered together. Since both parameters generally follow the general cost of living, this investment is also hedged against inflation. This is a welcome side effect that is not available with interest-bearing investments.