What is real estate annuity? A financial expert explains the various options and advantages

What is real estate annuity? A financial expert explains the various options and advantages

According to a report from www.focus.de, real estate annuitization is the act of selling a property and receiving the proceeds in the form of a lump sum payment while the seller retains the right to continue to live in the property. Various options make it possible to structure retirement according to needs. The two main types are usufruct and residential law, which differ in terms of the right of use and duration. Real estate retirement is becoming increasingly popular as it offers financial freedom for older people. With right of residence, the seller receives a compensation payment if he or she foregoes renting. Critics argue that it is cheaper to mortgage the house.

Rising interest rates and the age of sellers make access to credit more difficult and also influence the return expectations and percentages that sellers receive for their properties. However, there are still investors who invest in this form of capital investment, which is suitable for private investors. Real estate annuitization can be viewed as a social form of investment. This form of property sale can be attractive to older people as a way to gain financial freedom.

The impact on the real estate market can be significant. Older people may be more inclined to annuitize their property rather than sell or mortgage it to improve their financial situation. This can lead to higher demand for suitable properties for retirement. On the other hand, rising interest rates may reduce the percentage that sellers receive for their properties, which may impact the profitability of this form of investment.