It’s never too late to invest
Buying property in your 50s is a sound financial decision
The reality is most people, in particular those in their fifties today, won’t have accrued enough superannuation to keep them in the lifestyle they are accustomed to when they retire. If you are in your fifties, you still have time to build up a small portfolio of investments and property. This is an important piece of the investment puzzle because it is low-risk, insurable and won’t disappear.
Often people who are in their fifties have a lot more disposable income with many at the height of their career and the kids off the books. It’s incredibly important to take advantage of this situation and set yourself up with the right investments to ensure you can enjoy all that retirement has to offer.
Now is not the time to be trying to play catch up with high risk invest- ments. High risk can easily be summed up by investments that promise above average returns. The reason you don’t want to take risks at this stage is because you have limited time to recover the capital loss if the investment goes pear shaped. Generally speaking you should be investing and protecting your future financial position with reliable income-producing assets that generate both capital growth and cash flow.
Here are a few important tips to help you get started:
Protection and preservation of your capital is more important than the return on it
Invest in secure, quality property with a proven track record rather than speculating by chasing the latest ‘hot spot’. Investing in locations with upside is important however looking at a location’s history and track record is equally important. Well selected property in capital cities has shown over the medium and long term to deliver the most consistent returns both in capital growth and having ongoing occupancy, particularly in the inner ring around the CBD but not in it.
Invest in the liquid part of the market
It’s wise to invest in property that is easy to sell when and if you need to regardless of market conditions at the time. Here, I recommend buying investment properties around the median price for the suburb you’re investing into. I would stick to 20% above or below the median. There are always plenty of buyers and plenty of tenants in the middle of the market.
Pick the right property type
Traditionally houses have had better capital growth and apartments have received better rental yield. For some time now, in particular over the past decade, changing demographics have been tipping the demand towards apartments in many but not all areas so do your research. Generally two or three-storey walk-up apartment blocks have lower overheads by way of strata fees and better capital growth than high-rise apartments unless they have great views or some other highly desirable feature.
Know your target tenants
Your choice of tenant should influence the type of property you buy and where you buy it. For example, if the area is popular with young families, a three or four-bedroom house in a quiet street close to the local school, shops and transport would be a good bet. But if it’s an inner-city suburb full of young professional singles, you should be looking for a stylish apartment in a security building close to transport, cafes and shopping precincts.
Look to buy property that you can add value to
When you purchase a property that is already renovated it will save you from having to do the work yourself however you will generally pay a premium. Where possible I prefer to purchase an investment property where I can manufacture capital value and increase its rental return. Patrick Bright is the Director of EPS Property Search and is the best-selling author of four Real Estate books in his “Insider’s Guide” series. epspropertysearch.com.au
is the Director of EPS Property Search.