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I think the sweet spot to retire is around $1.5m. At a 5 to 7% return, 4% rule, zero debt, renting, and having a decent pension, you’re set. That’s why at a certain stage in life it often makes more sense to stay liquid, rent, and live off your portfolio instead of dumping a massive amount of cash into a house, which isn’t automatically a smart financial move.
Once you factor in property tax, maintenance, insurance, transaction costs, and the opportunity cost of not investing that money, real estate doesn’t always come out ahead. I think local real estate might actually underperform over the next decade. And what’s wild is how many locals still refuse to invest in markets at all and just keep dumping money into property because they assume prices only go one way. This lack of diversification is a huge risk, especially in a market this expensive and yield poor.
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