Holding rentals during retirement?

Question

Is it usually a good idea to hold a portfolio of rental properties during your retirement, or is it smarter to move into safer assets, like bonds? If you are holding rentals during retirement, aren't you risking a potential lawsuit down the road wiping out your portfolio when you're 70? I understand that real estate investing can get you on the road to retirement, but how about during your retirement?

Jeff Sprunger · Answer

interesting question.  I can see why some might be worried about a lawsuit later in life.  if you manage your own properties in your older years, you might not be able to physically maintain the property properly.  now, on the other hand, if you've owned the property for a long time, the loan is paid off, you have management in place, you are generating a nice income...I guess you could always buy a little more insurance to cover any potential lawsuits.  But, frankly, I'd rather sink my money into another Mai Tai (name any drink with a little umbrella)!

Jeff B. · Answer

Bought my MFU in '97, retired in '03 and just sold this Spring - - lawsuits were never part of the decision process.

George Despotopoulos · Answer

@Satya Nagarajan. I don't think you should be thinking about getting sued and losing your wealth when you own a rental property. Each property will have different types of insurance to help with any obstacles that come up with respect to lawsuits. Depending on the index fund or bond you invest in, those can arguably be riskier than owning a property in a good location that has consistent cash flow. At the end of the day, it is prudent to diversify your portfolio and mitigate the risk of downside from one asset class.

Satya Nagarajan · Answer

@George Despotopoulos Well I guess I didn't word it properly. I'm basically asking, if you own rental properties during retirement and happened to get sued, aren't you risking losing your wealth with no time to financially recover? When you're older, wouldn't you want to move into safer assets, like index funds or bonds?

George Despotopoulos · Answer

@Satya Nagarajan. Holding rental properties that are cash flowing during retirement is a common theme. Not sure why you will be risking a potential lawsuit down the road. Holding rental properties with no or little debt that are cash flowing is a great way to help you with retirement.