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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308232  
Subject: Re: Possibly the worst retirement investment Date: 5/20/2013 1:57 PM
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Before anyone starts, yes, there can be times when investing in real estate can be profitable.

Actually, this We recently had a real estate crash that helped bring down the American economy is a significant part of what's making NOW a time that investing in real estate profitable, which is why people are taking risks to get into real estate.

This isn't flipping. This is buying a house, renting it out, and then selling it when the local market rises.

Because prices and interest rates are so low, it's making cash flow positive rentals where 5 - 8 years ago, rental properties would have required an additional investment every month because they were cash flow negative. So, this is actually one of those times when real estate can be a profitable investment.

However, for most areas, the 'rise' in the local market is probably only going to be about the rate of inflation, so that's not such a great investment for retirement. But if the investor puts away the positive cash flow each month toward retirement and/or keeps the property and ends up with free & clear rental properties that can provide them retirement income (rather than selling) it can work well for retirement investing. So, I would say, given the proper circumstances, there are a lot worse investments that could be made for retirement.

But it's profitable for people who ... have sufficient income that they know they can afford the taxes and maintenance on the place.

Yes, I would agree that this is the issue. Those who don't have enough reserves to invest in real estate without doing something like withdrawing from or taking a loan from a retirement account are taking a very large risk with their retirement. But that doesn't make it the 'worst investment' - I would say that it makes it a 'very risky and potentially costly way to make a reasonable investment'.

So it's more of an issue about how people are getting the money to make the investment, than the investment itself.

AJ
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