Retirement & Equity Management

Retirement and Real Estate

The US homeownership equity market is the single largest asset class in the world at an estimated $30 trillion. By the time the average American retires, 83% of their wealth at retirement is tied up in their home’s equity, and yet it remains largely an “unmanaged” asset class. We believe all real estate is an investment and should be managed as such to produce the best results. Our goal is to help facilitate engagement between Financial Advisor and their client’s real estate to empower them to better manage this asset class.

The boomer generation in particular is faced with numerous challenges as tax laws, government oversight and financial markets are rapidly evolving as they prepare for their own retirement, address the needs of aging parents. Competent, wholistic advice and guidance is required now more than ever to help navigate these complex, dynamic real estate markets.

Given the significance of most people’s net worth in the form of equity in their home, it is important to evaluate options and strategies to use their homes equity to assist in driving better results for retirement. Some considerations are:

 

  • Eliminate the Mortgage payment – Improve cash flow
  • Protect Stock Portfolio – Sequence of Returns
  • Acquire Cash Flowing Real Estate Assets
  • Use of Self-Directed IRA’s/ Pensions to acquire real estate assets
  • Funding Long Term Care Insurance Needs
  • Delay Social Security Benefits
  • Liquidity

Empty Nestors – Age in Place & Downsizing

As the boomers move into the retirement phase of their life, they need to consider their living arrangements.

Should they retain their existing home?

Retrofit it for a more comfortable usage?
consider downsizing into a single story or smaller home for less maintenance?

All these decisions have a dramatic effect on the overall retirement plan. We can assist with the evaluation of the options, property tax considerations and execution of the plan.

Age in Place – According to AARP, almost 30% of Covid deaths were associated with nursing homes, aging in place has quickly become a much more common strategy.

  • Cash for retrofits and improvements to make home more suitable to age in place
  • Eliminate mortgage payment

Downsize

  • Listing & Selling current home – Max Sales Price
  • Identifying and acquiring the new property
  • Financing and leverage considerations
  • Guidance to properly transfer of property basis for income and property purposes.

Preparing for Gifting and Legacy

SREA can assist in evaluating and preparing your real estate assets to fit your legacy and gifting strategy.

  • Assessment of assets and heir’s suitability. Not all heirs have the interest or aptitude to successfully manage a real estate asset, there could be different financial needs amongst the heirs or possibly they simply don’t get along. Identifying some of these potential issues early in the planning process can help tailor a plan more suitable to everyone’s needs.
  • Evaluation of the portfolio or subject property. Provides a fresh perspective of the potential opportunities and current risks of an asset relative to today’s market, political and economic environment.
  • 1031 Exchanges – Listing, selling and acquisition of new property(s)
  • Ownership issues – ease of transfer, future managerial issues, cash distributions or cash calls.

Executable plan that can be updated and changed as the need arises.

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