Setting Your Future Retirement Dreams: Can Property Investment Help?

It’s fair to say many Australians dream of European river cruises with day trips through Tuscany and exploring Prague’s old town. Maybe upgrade the car to a Landcruiser Prado that can tow the caravan on the big lap around Australia.

Long champagne lunches, a sleek car after years of working, a new boat…. or finally, regular rounds of golf at some of our greatest courses or perhaps a shopping spree whenever you fancy.

However, many Australians face the prospect of a retirement that increasingly doesn't align with their dreams and aspirations. 

Singles aiming for a "comfortable" retirement will need a superannuation balance of $545,000. At the same time, couples need $640,000, according to the quarterly Retirement Standard published by the Association of Superannuation Funds.

A "comfortable" retirement means a holiday in Australia, having the occasional meal at the local surf club and owning a “reasonable car” ( i.e. a Mazda or a Kia).

But while a comfortable retirement offers you a decent quality of life, it is far from extravagant or elegant.

Average superannuation balances are $208,200 (males) and $168,000 (females), according to the Australian Bureau of Statistics in 2020.

Indicating Australians need to reconsider their retirement planning if they want to enjoy the lifestyle they aspire to.

You can access the age pension once you have run out of retirement savings. However, it provides limited financial support, with a maximum of $24,357 per year for singles and $36,722 per year for couples at the basic rate. 

To spend time doing the things you love in retirement, you can take steps to build your wealth in a shorter period with personalised advice.

Property investment is one way that can help you. Over the last 30 years, Australia's median property value has increased by 382%, according to research by CoreLogic.

With careful planning during your working years, you can unlock strategies to invest in property that provides rental income and potential capital gains through increased values to help you reach your above-average retirement goals.
 

Think long-term success

The right mindset is required for property investing.

Consider the long-term view - real estate is not a sprint but a marathon. Your investment objective should be a vehicle that produces consistent results over time.

Residential real estate has proven to be a sound investment option over the past two decades and beyond.

It's outperformed the returns from Australian shares, even outpacing inflation, in a report by the ASX and Russell Investments in June 2018, with more growth on the way and further spikes, specifically in certain regions.

Identifying the best property markets

As a new property investor, exercise patience and invest time in diligent research. The right property for your investment goals may be outside your local neighbourhood or interstate.

Begin by researching real estate markets across Australia. There are six macro drivers to indicate a market's ability to perform. These can help you identify locations that are likely to grow:

• Population
• Economics
• Demographics
• Infrastructure
• Yield variation
• Supply and demand

 These drivers can help determine which city or state is most favourable for your investment. For example, cities with ongoing infrastructure developments tend to attract more people, leading to population growth.

There are five micro drivers, which often come into play in suburbs or smaller towns. These micro drivers include:     

• The owners' established benchmark.
• The newly established benchmark.
• Socio-economic factors.
• Symbolic landmarks.
• The ripple effect.

When examining suburbs or smaller towns, aim to find the "worst" house on the best street (owners' established benchmark). This provides an opportunity to enhance the property's value to match the market rates of neighbouring properties. 

Another valuable strategy for predicting the growth of a micro market is to assess the average income with the median house price. In simple terms, if wages are high and housing prices are within reach, the property market has the potential to appreciate. 

Building your property portfolio 

To ensure you have the right strategy to build wealth for your retirement goals, you should assemble a strategic team to help you. You may have a goal, but achieving it requires strong market understanding, finance and cashflow knowledge. A strategic team will support you with proper planning, strategy and execution.

An experienced team of property investing experts can help you unlock market trends and behaviours. Whilst your family and friends can offer you advice, it may not be aligned with the current conditions or relevant tax implications. Importantly, their advice may not work for your personal circumstances or goals.            

When looking for specialist advice and support, your investment team should include:

• Property Strategy Advisor - they can act as your coach and mentor who understand your strategy and lifestyle goals
• Mortgage Consultant (Finance Expert)
• Property Acquisitions Expert
• Property Manager
• Accountant
• Financial Planner

Be part of the 1%

99% of aspiring property investors fail to achieve their lifestyle goals because they don't seek expert guidance.      

Regardless of your retirement goals and aspirations, Ramsey Property Wealth has a complete team of experts to assist you in understanding your current position and where you would like to be.

We will help you establish a clear objective and work on it together year after year, structure your finances, source the analytics, and locate properties, all while consulting with you to make the purchases on your behalf.

Contact our team to help you with a structured plan to build a diversified property portfolio that produces passive income in your retirement.