It’s never too late to invest

Buy­ing prop­erty in your 50s is a sound fi­nan­cial decision

Business First - - FRONT PAGE -

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. ep­sprop­er­ty­

Pa­trick Bright

is the Di­rec­tor of EPS Prop­erty Search.

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