Will investing in real estate help in early retirement?
Source: Times of India ( https://bit.ly/3E8h1SY )
Investments in real estate can also be made without having to own, run, or finance a property via REITs or Real Estate Investment Trusts. Even in the case of home loans, early investors are usually cognizant of the fact that as you pay back your loan and develop equity in your home, your cash flow tends to become better over time.
Yet, I have seen early real estate investors/homebuyers still worried about a key question that keeps them awake at night. How exactly can real estate investment help with their early retirement? After all, consistent work, and a retirement age of 60 are becoming antiquated in India. The ‘retire early India’ concept got steam following the US’s FIRE (Financial Independence Retire Early) movement. At the same time, most Indians lack ‘retirement savings.’ This means, that if an individual wants to retire sooner than the customary age, he or she needs to save and invest more actively, and within a considerably shorter timeframe.
This is why in this article, I would like to help examine this very question, and try to answer it in a way that can benefit early real estate investors. This will give you an idea of why the current investment climate can in fact be a fortuitous one for the long run.
The pursuit of early financial independence
Can you put all your eggs in the real estate basket for a comfortable nest egg?
The road to financial independence has historically been rooted in real estate investments. Real estate is indeed a great instrument to secure your retirement home, help bring in additional income sources, and therefore measure up against what’s to come after you retire. At the same time, real estate investments can also be tricky business. It can be beneficial for your retirement account with the right steps and common pitfalls avoided, but you also have to learn to improvise your investment strategies given all properties may not turn out to be as lucrative as advertised on the developer’s brochure.
Building towards retirement in 2022
How attractive are the yields from real estate towards retirement?
As India’s second-largest employer after agriculture, the current climate is very viable for anyone wanting to build their retirement corpus early. The industry is expected to reach $9.30 billion in 2040 (+$7.58 from 2019), and contribute 13% of the national GDP by 2025. If you are not swayed by future estimations, then let us look at the recent past.
‘We don’t have to be smarter than the rest’
We have to be more disciplined than the rest.” -Warren Buffett
It is in most Indian’s DNA to heed the call to property ownership. The playing field is ripe for the taking. The only difference for an early retiree may not necessarily be being an early real estate investor, however. It may be in he or she being consistently aware, diligent, and methodical towards their retirement fund with a few decades-long deadlines.