Most retirees prefer renting income. But there comes a time when retirees may have to decide whether to gain continuous rental income or sell property and deposit money in a bank. This week, we discuss the factors that promote this phase transition.
Financial physical
Real estate are an important part of most retiree investment portfolio. The reason is simple. Receive a constant cash flow every month that replaces the active income obtained by the doors of your working life. It is important to highlight that it can increase the rent annually to help manage the increase in monthly expenses of their homes.
The other side is the real estate sector, being a physical asset, requires continuing attention. The cost of repairs will increase exponentially if it does not maintain the property. So, there is a risk of vacancy. What happens if you can’t find an adequate tenant? There comes a time in the life of each retiree where they feel that financial assets are easy to administer. We call this the phase transition. This is when retirees that until now preferred physical assets are now ready to adopt financial assets.
As a retiree, when should a transition from such a phase adopt? One, when it is difficult for him to get tenants. Two, the cost of maintenance of the property is increasing. Three, his property is aging. This is a crucial factor if you own an apartment, where the part without displacement of the Earth is small; Old property decreases rental and consideration of sale. And four, cannot handle physical assets due to your state of health. Converting physical asset into a financial asset is not easy. In addition to finding an adequate buyer, you must reflect all the associated costs related to the sale, including taxes.
Conclusion
Sometimes, the best time for a phase transition is when there is an increase in real estate demand, since property can be sold for a good price. In other words, you can reflect to the phase transition even if you do not face any of the problems mentioned above. Physical assets have charm due to the touch and sensation factor, but they are difficult to handle as we age. That said, you may not have to consider the phase transition if your adult child is willing to activate property administration. But remember, if you have more than one child: it is easy for legal heirs to divide financial than your physical asset after your life.
(The author offers training programs for people to manage their personal investments).
Posted on April 21, 2025