How investing in property can help you retire with ease
By | 18th Jun 18

Invest correctly with the right strategy!

Property investment is a great way to generate income for your retirement. If you invest correctly, with the right strategy, your portfolio could potentially produce rental returns that equate to a healthy income. The fantastic and fun part of property investment is that you do not have to wait until you retire to redeem the rewards from a great investment.

The opportunities are endless with property investment and if you start early enough, you may even be able to scale back your usual workload as the income from your portfolio could be enough for you to live on. There are two main ways to retire comfortably by investing in property:

  • Rental income/Rental Return/ Yield
  • Capital Gains/Capital Growth

So what do these terms really mean?

Rental income – this is the income you get each month from leasing your property

Some thinking is that the only way to retire comfortably through property investment is through Capital gains, this is not always necessarily the case. If you start young enough and invest in smart opportunities, you may be able to pay off the loans on your investments. What this creates is positive cash flow each month from rental returns. Even if you have not been able to pay off the whole loan before you retire, as long as the rental returns are higher that your mortgage repayments, you will find yourself in a positive position depending on your lifestyle. The idea is if you can purchase multiple cash flow properties, you can easily generate enough income to retire.

Positive Cash Flow – This is the when your property generates more rental income than it costs in expenses. Buying property that is positively cash flowed or close to a positive cash flow can really set you up in the future.

Capital Gains – When the property value increases above what you paid for it

Property values generally increase at a rate higher than inflation which is why capital growth allows for many property investors to reap rewards if they are willing to hold an investment long term. This strategy is not usually effective in the short term. If you decide that capital gains is the way for you to retire the general idea is with each property purchase, you obtain equity from your existing properties to buy multiple properties. Many investors use this technique to multiply their portfolio by selling down or liquidating assets to bring down their debts or to turn their other properties into positive cash flow investments.

At the end of the day, you need to weigh up what your lifestyle is now, and how you would like to retire in the future. For advice from our financial partners and property consultants, start the conversation today with our team! Call us on 03 9886 8900 to make an appointment today.

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