Condo Investing: Should You Invest in a Retirement Home?

Jul 07, 2021

If you are still 20 to 30 years away from retiring, should you already think aboutinvesting in a retirement home?

According to a retirement survey by the Global Aging Institute, over 90% of Filipinos are worried that their earnings may not be enough to support them during retirement. It also mentioned that most employees in East Asia are not saving enough money to sustain their lifestyle once they quit their job.

Housing is one of the factors that should be taken into consideration when planning for retirement. You might not probably think about retirement savings or investment while you’re in your 20s and your 30s, but it is necessary for you to start building one up as early as possible.

Even if retirement is far off in the future for you, there is no better time to prepare for your retirement condo home than today. Investing in a retirement home early, rather than after you retire, has a lot of benefits.

Benefits of Investing in a Retirement Home

There are many reasons why investing in a retirement home should be a decision made sooner than later and why doing so is the best step for you to take. Here are some of the reasons why.

Easier time to get approved for a mortgage

Younger applicants generally have an easier time getting approved for a mortgage while they are still young and fully employed.

According to experts, your debt to income ratio will be lower while you are still employed, which makes securing a mortgage loan easier. Considering locking in a mortgage rate while interest rates are low is a smart long-term investment. If you invest in your retirement home now, you can save yourself money in the long run.

You will not know when you need to retire

In the Philippines, the optional retirement age for both public and private employees is from 56 to 60 years old, according to the House of Representatives. However, some employees are planning to retire as early as 55 years old. Whether it is for one’s health or other personal reasons, the sad truth is, you will never know when you need to retire.

It would help you a lot if you start preparing for your retirement early and invest in a retirement home that you can rent out and earn passive income from.

Enough time to save up for any renovations or upgrades

Going through the process of investing in a retirement home early also gives you plenty of time to save up for any renovations or upgrades that you might need in the future. You might also consider adding accessibility features to your retirement home that you may not necessarily need now.

Take your time to plan ahead and use the money you’re making now to make the necessary changes to your retirement home to save time and stress in the future.

Second-home that can boost your income

You might now be convinced that investing in a retirement home early is advantageous. But, you might also be thinking by now how exactly you can afford two mortgages at once. Although it may seem burdensome, investing in a second home now can boost your income and help you save up for retirement sooner.

Think of your retirement home as an investment property. You can lease out your second property until you are ready to retire and use the rental income to pay your mortgage.

The sooner you make your acquisition, the more time you have for someone else to pay down your second mortgage. Any rental income that is not used to pay for expenses can also be used to boost your retirement savings plan. During this period, you would have already enjoyed value appreciation on two properties instead of just one.

Once you retire and finally move into your second home, you can then lease out your primary residence instead of selling it off. This will enable you to maintain the additional income stream in your retirement years and can also allow you to continue expanding your rental portfolio.

Common Mistakes To Avoid When Investing in a Retirement Home

Investing in a retirement home will make you think about the future and anticipate life changes. It can be worrisome because it is hard to know exactly what to expect as you get older, but here are a few common mistakes to avoid if you are considering investing in your retirement home soon.

Don’t Exceed Your Budget

While there are several upgrades that you can make when investing in a retirement home, you should remember to be careful not to exceed your budget. Think about unexpected costs that you may encounter in the future. Remember, your income may not always be as high as it is now, so plan carefully and accordingly.

Avoid Impulse Buying or Investing

Investing in a retirement home can be the perfect opportunity for you and your family to move to a new place. However, before deciding, you have to think about the property location and what it means to live there.

You have to research the area you want to move to and make plans accordingly so you are not caught off guard by new places, especially as you get older.

Don’t Forget About Your Family and Friends

One thing to keep in mind as you search for your dream retirement home is your family and friends. As we may know, it takes time to become part of a new community, and it can be difficult to meet people who will become your friends after moving to a new place.

Think about how close you will be to those you like spending time with and consider when searching for the perfect home.

Tips for Investing in Your Retirement Home

Before investing in your dream retirement home, you’ll want to make sure that you have a good plan in place. Avoid the mistake of investing in what you think is your dream home. Invest in a retirement home that would fit your lifestyle after retiring.

We have enlisted some tips to help you invest in your dream retirement home.

Assess yourself

Ask yourself which kind of home and lifestyle you desire. If you have a significant other, it is important to have a conversation about your wants and needs. This may require some compromise, but you have to make sure to reach an agreement where you can both be happy and fulfilled. It is always a good habit to talk about financial matters in retirement as well.

Test it out

If you plan to move to another place or into a retirement community, make sure to test out your plan. Someone who likes the idea of living in a community or downscaling from house to condo might find that they don’t enjoy abiding by condo rules.

Spend time visiting different target communities or vacationing in various destinations to find out what environment suits you best.

Consider mobility and accessibility

When looking for a retirement home, make sure to consider mobility and accessibility. Don’t assume that you will always be able to drive. Instead, make sure to check on the walkability of the area and the availability of public transportation.

It is best if the retirement home is in close proximity to important places, such as the hospital or the grocery store, and that you are able to go to these places, even without a car.

Remember your friends and family

Many people dream of retiring to a faraway and secluded destination, such as a beach town, province, or even abroad. However, before you leave your old life behind, make sure to consider how big of an impact leaving your family and friends is and think about the support network that you can have once you move into your retirement home.

Monitor your investments

The money that you need 5-10 years into retirement is crucial, so avoid overspending. If that money is lost, it would be harder for you to recover it over time. Make sure to look for investments with predictable income sources and lesser risk but you also have to remember that the more predictable the income, the lower the return it will give you.

Prepare your post-retirement budget

You may opt to consult a financial advisor and work out a realistic post-retirement budget. It would be helpful for you to get an idea of your monthly retirement income and expenses and identify the areas that need more preparation.

This can also be a way to look into passive income opportunities that would help you boost your post-retirement income.

Invest based on your future income

If you are planning to invest in a retirement home early, make sure to calculate how much house you can afford based on your post-retirement budget and not on your current income.

Even if your monthly income were to stay roughly the same, you have to think about the other factors such as home-related expenses that might change significantly.

Plan for inflation

Inflation and rising prices are unavoidable. These can eat away the buying power of retirement funds, so when planning for retirement, assume that prices will go up and start planning for it.

Think about home-related expenses

Make sure to consider home-related expenses when calculating your home-buying budget. Costs may change based on the age and condition of the property or whether or not your future home is part of an HOA or retirement community.

Pay for your down payment wisely

There are individuals who are tempted to put their savings toward a down payment to lower their monthly mortgage. However, this may lead you to be house rich and cash poor, leaving you with little or no room for unexpected expenses or emergencies.

It would be best to sit down with your lender and financial advisor to choose the right mortgage option and debt structure that best fit your lifestyle and needs.

Focus on your health

Focusing on your health today is key to staying fit in retirement. Health care costs are often overlooked by retirees, and these could really burden your finances later on when you don’t keep yourself healthy.

Work a few more years

One of the ways to ensure you have enough money when you retire is to work a few additional years, beyond what you originally had planned. It may not be what you want to do, but it will help add more cushion to your nest egg in the long run. This can add significantly to your retirement funds.

Investing in your dream retirement home may require you to make a few small changes like working a few years longer, saving a bit more, controlling your expenses, and adopting some healthy lifestyle habits, but think long-term. These small changes can add up to a much more comfortable retirement.

If you are looking for a retirement property, you may want to consider investing in one of the condo projects of top property developer, Vista Residences.

Vista Residences is the condominium arm of the country’s largest homebuilder, Vista Land & Lifescapes, Inc., which offers ready for occupancy and pre-selling condominium projects in Manila and Quezon City that are strategically located within inner-city areas, in close proximity to premium universities and developed business districts.

At Vista Residences, unit owners can take advantage of the property’s centrality. The properties of Vista Residences are strategically located near the country’s premium universities and CBDs, making them an attractive investment for both local and foreign investors.

Vista Residences has ready for occupancy condo projects in Manila such as Vista Taft, Vista Heights, Vista GL Taft, 878 Espana, and Crown Tower University Belt. It also has pre selling projects in the said area which include Vista Recto, Plumeria Heights, Tennyson Heights, Bradbury Heights, Sky Arts Manila, and Kizuna Heights.

Meanwhile, its ready for occupancy projects in Quezon City include Wil Tower, the Symphony Towers, Pine Crest, and Vista 309 Katipunan. It also has pre selling condo projects in the said city such as Hawthorne Heights and Vista Pointe.

Now that Vista Residences is expanding, you can also experience a cozy and premium condo living as it now has its condo in Cebu, Cagayan De Oro, Davao, and Baguio.

Living in Vista Residences enables you to enjoy convenience, where everything is pretty much within walking distance or a few minutes away from the property; comfort because the project features and amenities are designed to deliver comfort at all times, which makes condo living a worthy investment; security that is 24/7 and CCTV monitoring, which makes the residents safe and secure within the property.

In line with Vista Residences’ thrust to offer convenience among its residents, it also features an AllDay Convenience Store and Coffee Project in all its projects.

Vista Residences is part of Vista Land’s roster of vertical housing brands that cater to millennials and young professionals. The other vertical brands include Camella Manors, COHO, and Crown Asia.

For more information on Vista Residences, email [email protected], follow @VistaResidencesOfficial on Facebook, Twitter, Instagram, and YouTube, or call the Marketing Office at 0999 886 4262 / 0917 582 5167.  

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