Real estate the new pension plan - pre-seniors see virtues of real estate as a sure bet

 

Part 1 of 2 series

 

HONOLULU ADVERTISER August 14, 2005

BY LISA SCONTRAS

Custom Publishing Group

 

With one American turning 50 every seven seconds, retirement planning is as hot a topic as the Hawaii real estate market. Pre-seniors, losing confidence in their ability to earn enough from 401(k) or stock investments to live comfortably, fear they won’t have enough money to sustain them through their retirement years.

 

Many are raising children as well as caring for aging parents and find the financial pressures cumbersome. To make matters even worse, some company-provided, private retirement plans are vastly under-funded and currently are being reduced or phased out completely. Bottom line: it’s becoming clear to many people that they will be receiving far less money when they retire than they originally counted on.

 

The answer for many? Real estate.

 

Prudential Locations CEO Bill Chee puts it simply: “I don’t know much about stocks, but I know one thing. I know that in real estate you don’t have to know much, ... you just have to be patient,” he says.

 

Chee confesses that he isn’t very good at saving money.

 

“So I started buying real estate (as an investment) 35 years ago and it became a forced savings for me. What started out a negative cash flow, eventually led to the situation where the rental income paid the mortgage and then after a while, you’re left with a nice nest egg.”

 

He recommends implementing the basic investment principals of using income while you have it to prepare for retirement later. And listening to Chee, it makes so much sense.

 

“Take any apartment 20 years ago, and it’s gone up in value now,” he points out. “But if you bought stock with your money, some of that stock may be worth zero. No real estate ever becomes worthless.”

 

Chee also adds that an extra benefit from owning real estate is that it can provide you with a tax shelter as well.

It’s not surprising, then, that across all generation groups real estate is becoming the new pension for folks who want to take control of their retirement plan.

 

 

CONDOMINIMUM IVENTORY BY PRICE RANGE

Second-quarter 2005 statistics from the Honolulu Board of Realtors illustrates the price ranges (shown in thousands of dollars) of the Island’s condominium listings.

 

 

back to Helpful Articles for Finance

 

view Part 2 of this Article