Do not rely on super for retirement
The great Australian dream of owning a home is an inadequate one in times of rising house prices, interest rates and costs of living. Ordinary Australians on average incomes must consider owning more than one property if they are to fund their retirement and ‘live the dream’, according The Investors Club, property investment specialists. Spokesperson Wendy Priestly said superannuation was often not enough. ‘‘With share markets responsible for poorly performing super funds since 2008, Australians need to develop the skills and know-how to invest in alternative channels to support their retirement,’’ she said. Ms Priestly said the widely-held belief people must have a high income to invest in property was a misconception. There are a number of reasons why most investors do not buy beyond one investment property. ‘‘ABS figures show that 50 per cent of investors are postcode buyers. Buying in the area where your own home is ties you to the local property cycle — a poor strategy.’’ Another poor strategy is investing in a bargain. The Investors Club’s top 12 tips for building a successful property portfolio:
Property investing is essentially a business, so develop a business mind. Avoid investing in properties you would want to buy for yourself; buy for tenants.
Do not begin investing until you understand the numbers.
Diversify across lenders to increase your borrowing capacity. Your goal is to own a large asset base and your lender may not have the best investment loan at the time.
Understand what the holding costs are (outgoings minus incomings) and make sure they are manageable. Know how you will fund the costs.
Invest in locations with high population growth, high employment, and high mid-tolong term capital growth.
The area must have a sound long-term rental history.
Choose properties close to important amenities such as schools and public transport.
Choose new or renovated properties to maximise depreciation, tax savings and rental demand.
It is best if the properties are high-quality in design, materials and construction, for minimal maintenance.
Buy and hold for a minimum of seven to 10 years. Few people grow wealthy by buying and selling continuously.
Diversify your investments in capital cities across Australia, to protect your portfolio from markets with prolonged flat periods.
Make sure you have a team or property investment specialist experienced in building portfolios across Australia, who can provide ongoing support and help you manage challenges during the life of your investment such as changes in tenancy and changes in strata laws.