Ask most folks what they think is the most invoked real estate cliché, and the vast majority would probably respond with, “Location, Location, Location!!” There are plenty who’ve been able to successfully ignore that axiom without negative consequences. An example would be flippers. They’re in, out, then on to the next one. As long as someone thinks the property is located to their liking, the flipper has no location related worries.
However, when investing to build a reliable retirement income, that approach can, and more often than not, does lead to major disappointment.
Then there’s the question of the property’s age. It’s fine now at 25 years old, but what about in another 25 years? Do you seriously wanna retire with a portfolio full of income properties sportin’ AARP cards? Why on earth would ya do that to yourself on purpose?
When we add those two factors together, it’s easy to predict how that retirement might turn out. Let’s review, shall we?
A buncha old income properties located in areas that are, um, less than stellar. Management time/costs go up. Tenant quality goes down. Functional obsolescence rears its ugly head. Even worse, what was a mediocre location at acquisition, has gone downhill significantly. You’re now literally hesitant to visit the places yourself.
Again — why would you do that on purpose? What do ya think the dire consequences to your planned retirement lifestyle will be? Here’s just a glimpse.
- Significantly reduced cash flow.
- A constant time suck — and at the worst time for you.
- Who wants to buy them if you decide to make a change?
- Tenant quality suffers, often further each year or so.
- Worst of all? You must adjust your planned lifestyle.
Review your current long term real estate investments by location, then age. If they fail either test? Get out of them by yesterday afternoon around 4:30 or so.
It’ll be one of the wisest things you’ve ever done for your retirement plans — I promise.
Remember this . . .
No matter what you’re tellin’ yourself now about the location quality or age of your investment properties, the truth will smack you between the eyes as retirement hits imminent status.
That’s not an epiphany you wanna have. It’s not the ‘game changer’ you ever want to experience.