It’s a common myth that property investing should begin early in life. True, the earlier you start your property investing journey, the longer you have for your properties to gain in value before you consider retiring.
The good news is though that being in your 50s should not prevent you from buying your first investment property. Because, let’s face it, you still have around 10-15 years before you retire and that’s ample time for your investment properties to increase in value and provide a very comfortable retirement lifestyle for you.
Here are some of the typical reasons why it’s not too late to invest in your 50s.
Not Everyone Has To Liquidate Their Investment Properties When They Retire
Another common myth is that once you retire you need to liquidate your investment assets to help fund your retirement. This is far from true.
If you have an adequate superannuation fund and you couple this with your pension entitlement, you should have ample funds to live on comfortably. Of course this will be different for every individual but someone who own their own home and has little debt should be able to live comfortably for 10-15 years in retirement without having to liquidate all their assets.
A Positive Cash Flow Portfolio Can Provide A Good Retirement Income
Another advantage of not selling your investment properties when you retire is that they can provide you with a nice income. This is especially true if you’ve invested wisely and your property portfolio has a positive cash flow which it certainly should have after 10-15 years.
The Typical Property Cycle Is 7 To 10 Years
As most investors know, the typical property cycle in Australia is 7 to 10 years. This means that properties should increase significantly in value over this period in time and sometimes can even double in value.
This means that your investment properties will have accumulated a nice capital growth by the time you’re ready to retire. If you then decide to sell one or more of your properties you can use this extra money to pay off the loans on the remaining properties.
What this means of course, is that you then own all of the remaining investment properties outright and can very comfortably live off the rental incomes.
Things To Watch Out For As An Older Property Investor
As you’re entering into property investing at an older age, you need to be mindful of some of the pitfalls and make all your investment decisions wisely. It is definitely prudent to consult a financial adviser or wealth consultant to ensure that you’re making the right decisions for your future.
Here are some things that you need to be particularly mindful of:
- It Can Be Difficult To Access Finance
Although in your 50s you still have 10 to 15 years of working life ahead, you might find it more difficult to access suitable finance. However, don’t be swayed by this as it’s not impossible.
If you have a sizeable deposit and can furnish a shorter term loan, then you should have no difficulty in funding your investment properties. At this stage, it would be advisable to speak to a reputable mortgage broker who is experienced in dealing with older investors.
2. Don’t Take On Too Much Debt
In your 50s it’s particularly important to be wise about the amount of debt that you take on. Make sure you don’t over extend yourself because if something doesn’t go to plan it could certainly be more difficult to recover from any losses.
Generally, it’s advisable to try to look for positive cash flow properties in good growth areas where there is a rising demand for rental properties. This will ensure that your properties are never vacant for long and that the rents received will cover the property expenses such as mortgage repayments and rates.
3. Don’t Invest In Speculative Properties
Because you’re starting later in life and may feel that you have to catch up for lost time, don’t be tempted to invest in speculative properties. Do your research well and only purchase properties in established areas which have a decent demand for rentals and a good growth potential.
4. Consider The Capital Growth Potential
As we’ve said before, do thorough research before you purchase any property and ensure the area has growth potential so that your investments will grow in value.
Sound Suggestions For Older First Time Investors
Here are a few suggestions for older first time investors to consider.
1. Have A Mix Of Property Types
Try to have a mix of property types in your investment portfolio to increase the chances of good capital growth. This could include apartments, free standing houses and even commercial property.
Investing only in apartments could be detrimental as the supply continues to grow and some areas are already seeing signs of oversupply.
2. Consider Renovating An Older Property
If you want to help increase the capital growth of a property quickly, you could consider investing in an older property and then renovating or modernising it. This will see your investment increase in value significantly over a relatively short period of time.
3. Set Up A Joint Venture
As an older investor you might also consider setting up a joint venture property portfolio with your children, siblings or other family members. This will help to spread the risk and might also make it easier to obtain finance for a longer term.
If you are going to do this though, make sure that you draw up a contract which stipulates percentage of ownership for each partner and how the income and proceeds are going to be split.
If you’re in your 50s and you think it’s too late to start property investing, you couldn’t be more wrong. As long as you do your research and approach your investment decisions wisely, you still have plenty of time to build a sizeable property portfolio to set you up for a very comfortable retirement lifestyle.