Thanks to the fact that it can generate immediate income while also growing in value over the long term, real estate can be one of the most secure retirement investments.
Property investment for retirement empowers you to use money that you borrow from the bank to grow your own wealth through both passive income and long-term asset appreciation.
What is the best property investment for retirement income?
Real estate can be an ideal investment for retirement income, provided that you grow your portfolio smartly. Working with a property practitioner to reach your goals is a great way to capitalise on an expert’s knowledge and experience. Given that bricks and mortar are tangible assets, real estate is often seen to be the safest place to put your retirement money.
Some things never change, and the old real estate adage of “location, location, location” is one of them. When making a property investment for retirement, choose locations with strong demand and growth potential. Urban areas with proximity to amenities like schools, hospitals, shopping centres and transportation hubs are strong contenders with great appreciation potential.
Take the time to discover what rental yields are like in the area that you’re considering buying. Factor in that the rental income that your property generates will need to cover an array of expenses, including bond repayments, levies, rates and property maintenance.
When considering your real estate options, explore various types of properties including residential, commercial and industrial properties. The choices you make will be determined by your investment goals and risk tolerance. If your primary interest is residential property, there are many advantages to be found in investing in sectional title units. Over and above the relative security offered by complexes, your property’s exterior maintenance is likely to be taken care of for you. Thanks to the amenities that they offer, sectional titles homes are popular among tenants, making them ideal for a buy-to-let investment. Owning a sectional title property also gives you a great opportunity if you decide to downsize your home when you retire.
Any investment that you make towards your retirement — including real estate investment — must be seen as a long-term investment. Your focus should be on building a sustainable portfolio that generates steady income and appreciates in value over the long term.
Top tips for people looking to invest in real estate for their long-term future
- Buying property with the intention to let it out has been aptly described as “the bread and butter of real estate investment”. Your tenant’s rent payments will help you pay off your asset in the short term, while in the long term, you will add a property to your wealth portfolio.
- Renovating properties that you purchase, with the intention of reselling them at a higher price, can be another lucrative investment strategy. However, this should be done with the assistance of a property practitioner to ensure that you don’t overinvest in improvements.
- If you’re taking a home loan to make your investment, make sure you get the best possible deal by enlisting the help of a bond originator.
- Knowledge is power, so make sure you know everything there is to know about the area you’re considering investing in. Download online reports about property sales in the area, liaise with a property practitioner who specialises in the region and do your own due diligence if possible by driving through the neighbourhood at different times to suss out traffic, noise levels and other potential irritations.
Securing funds for the future is foremost on most South Africans’ minds and property investment for retirement can be an outstanding way to accrue wealth. Speak to the team at Seeff to find out more about property investments that are right for your portfolio.
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