We all know that property can make a great investment. The case to retire on property is easier said than done. To do so one must be disciplined, exercise caution and develop and follow a well considered strategy.
Property has proven to perform over the long-term, in fact it has proven to be the vehicle that has created many millionaires. The secret is establishing a plan for retirement and being able to stick with the plan.
There are two distinct phases to building a property portfolio that can sustain your retirement.
Phase 1: The Acquisition Phase
The key to building a substantial portfolio is using borrowed funds. One must get used to handling large sums of monies and holding high levels of debt.
Don’t let the levels of debt phase you. Only borrow within your means and always ensure your asset value exceeds the debt levels. Always leave a “buffer” in case of the unexpected.
Research the types of properties that make great investments, tenancy advice, and taxation advice and obtain an understanding of how it all works.
Understand that purchasing just one investment property will not enable a retirement lifestyle; rather you will need to understand that a portfolio can be five properties and more in order to achieve an early, wealthy retirement income.
Phase 2: Retire Debt
In order for you to retire and obtain an income from property you eventually need to own your property unencumbered or debt free. This being the case a good strategy is to purchase (over time) a number of investment properties, sit on them as they grow in value and as retirement nears begin to sell some of your portfolio in order to repay all borrowings on those properties you wish to keep.
This will give you a smaller portfolio but a fully owned portfolio. The rental income is yours to keep.
Obtaining the right property for your needs is important to your success. Seek advice from those that have done it before, have an understanding of taxation laws and can show you how to build a retirement nest egg.
If you would like to explore your property investment options, contact us.