Real estate buyers in Israel can be divided into a few categories: The procrastinators – those who wait for prices to go down; the know it all, that bought before prices went up and “know” everything there is to know; the complainers- those who waited and waited and understand that they have no alternative so they buy and complain. My favorite group is the planners: those who are buying in order to take control of their financial future, and specifically their retirement.
In this article I’ll focus on buying real estate for retirement and compare it to investing in other pension options: pros, cons and practical advice.
- Higher returns: Real estate is not an inherently better investment, but the investing right in real estate can yield higher returns.
- Leveraging: Buying real estate allows you to leverage your capital to a larger investment. If you construct your mortgage correctly, it can match your retirement date.
- Full payment: In traditional pension schemes, your family receives only partial survivors’ benefits. With a real estate investment, the entire capital is passed on.
- Helping your children: It is a known fact that first time buyers rely more and more on their parents. Investing in real estate can achieve two goals:
1. Without going into details, due to mortgage regulations, parents who own two or more properties, can more easily help their children.
2. If you are planning on investing a major part of your saving in (your children’s’) real estate, then it is best to do it right away, and avoid unexpected price changes.