Too Late to Buy Investment Property?
Are you in your 40s or 50s with no investment property or other investments, minimal superannuation and are panicking about your financial future? Stress no more, because wealth-creation through property has absolutely no age limit.
While most property experts strongly advise beginning an investment property journey as early as possible, there is no such thing as ‘too late’ in real estate. In fact, people in their 50s can easily add $500,000 to their retirement nest egg with the right property investment strategy.
A lot of people have the mindset that it is too late to buy and investment property, even if they are earning a good incomes and have equity in their principal place of residence. They are of the mindset that ‘property investment is not for me
Have a Property Investment Mindset
To begin their journey, aspiring investors must get the right mindset.
Think: It’s never too late to start and there’s no better time to start than now.
Much like starting a business, buying an investment property requires a well informed and carefully planned approach in order to get started. After all, it’s better to start a bit late than to not start at all.
Beginning a wealth-creation journey at 40 or even 50 gives the investor 20 to 25 years before retirement—enough to reap the investment property benefits of one, possibly two market cycles.
determine your property investment goals
After getting the right property investment mindset, aspiring property investors are advised to determine their goals. This would be the basis of their future property investment strategies.
Then, they can move on to educating themselves on investment property before jumping into making any major decision. Then continuing their property investment education as they go through their property investment journey.
There’s extensive research that goes into picking the right investment property. From where to buy an investment property and the types of people living in your investment property. Right through to full details on why the particular investment property is the right choice.
The key to smart property investment is being very clear on your personal long-term strategy. This will help in finding the right investment property in the right location.
The investment property journey
Once armed with research and education, property investors can now enter the accumulation phase. This means building their investment property portfolio by buying A Grade investment properties.
Experts advise investors to focus on the fundamentals of the investment property instead of falling for the ‘herd mentality’, or following trends. Ultimately, there should be strong focus on capital growth, as well as strong cash flow (rental income) for your investment property.
To mitigate risks and accommodate any unexpected expenses with your investment property, it is also encouraged to establish a cash buffer.
Strong indicators of good investment property locations and growth potential are rising median house prices, population and jobs growth, strong existing infrastructure. A healthy pipeline of new infrastructure, a buoyant local economy and a healthy balance between supply and demand is a strong consideration too.
Condensed, the simple property selection criteria comes down to three factors: Local amenities, infrastructure (existing and future investment) and rental demand.
what investment property should i buy?
At Prospa Property Advisory, we recommend mostly house and land packages or quality townhouses developments as the best investment property. We suggest property investors avoid high density, inner city apartments because the capital growth can often be limited.
A strong focus for many of our investors is on a brand new investment property because they require less maintenance and everything is covered under warranty. Plus it is more appealing to a tenant, who will often pay a premium to live in a more desirable property.
There should also be considerable tax savings through depreciation that makes the overall cost of holding the investment property much cheaper.
At Prospa Property Advisory, as a buyers advocate we have a benchmark requirements for recommending an investment property.
We suggest having at least 100,000 head of population residing in a 20km radius of your investment property, this provides a solid rental pool – as well as a resale market should the investment property need to be sold.
A strong recommendation is that property investors avoid single industry employment locations such as mining or defence towns, which can see large drops in house pricing and rental demand if the major employer closes or relocates.
Avoiding areas which have a large percentage of rental investment properties is a key strategy. Excessive competition among landlords can lead to reduced rents is highly recommended. After all, you don’t want to lose money in your investment property.
Some people think buying an investment property will cost more than it actually does. Most new property investors are surprised that it does not cost that much to own an investment property More information on that can be found in this article CLICK
engage professional help when buying an investment property
To help them make smart decisions, investment property buyers are encouraged to engage a QPIA (Qualified Property Investment Advisor), like Prospa Property Advisory.
By doing so, they get a full analysis of the investment property market and a deep understanding of property investment strategies. It is important that an investor’s property investment strategy aligns closely with their property investment goals.
The best property investment professionals are educated, experienced and licenced. Above all, they are focused on delivering best client outcomes, without having to satisfy personal motives.
A QPIA is a property investment professional who acts ethically and in the investor’s best interest. A real estate agent giving unqualified and unlicensed advice could be detrimental to their property investment potential. They are only able to sell you the properties they have available.
Over a longer period a property investor will accumulate enough investment property or properties to satisfy their goals. Then they will enter the consolidation phase and slowly reduce the debt on their investment properties. Ultimately increasing the cash flow that they can channel through to their retirement nest egg.
Finally, after the consolidation phase, the investor can enjoy the lifestyle phase, supported by the investment property portfolio that they have managed, grown and protected through the years.
The property investment process should be viewed as a long-term strategy and supported by advice from professionals, like a QPIA. They understand the property investment process and are armed with all the right research. And most importantly, have the investor’s best interests at heart.
Right now is the best time to start that property investment journey.
Prospa Property Advisory are QPIA accredited by Property Investment Professionals Australia – website www.pipa.asn.au
