Retire on property: long-term investment strategy

retire on property

Retiring with investment property is the ultimate dream for most property investors, and the main reason many property owners go into investment in the first place. Providing you enter the Perth property market with a long-term investment strategy and a reasonable means to fulfil it, you could be that one step closer to financial independence (or, if you’re really on top of your investment game, early retirement). Here are some steps you will need to consider if you plan to retire on investment property.

Setting up your investment strategy

If your long-term plan is to retire on investment property, one of the first things you will need to consider is your investment strategy. Typically, there are two investment strategies you can follow to fund your retirement.

  • Rental income – If your plan is to live off the rental yields from your investment properties, you will need to ensure your Perth rentals generate enough income to cover your expenses and lifestyle. One of the biggest things you will need to consider here is the ongoing cost of owning and maintaining your properties. Once you take maintenance costs, ownership fees and home loan repayments into consideration, will your rental income cover your living costs?
  • Capital gains – Generally the more popular investment strategy, your second option is to build a portfolio of properties with a high potential for capital growth, sell them for a greater profit and either use the capital gains to fund your retirement or take out an equity loan to fund your next property purchase.

How many investment properties will I need to retire?

The number of properties you will need to retire depends on a combination of factors. Firstly, what kind of retirement do you plan to lead? If your long-term plan is to take annual trips to the Bahamas, you may need a few more properties in the bank. If, on the other hand, you intend to have a more modest retirement, your annual living costs will inevitably be lower.

The amount of investment properties required for retirement will also depend on the value of the properties in your portfolio. If you’ve opted to live off your rental income, you will need to consider the net rental yield for each of your Perth rentals. This will obviously vary depending on the rental value of each property and the expenses required to maintain them. Secondly, you will need to take into account how much capital growth you can expect to achieve on each property. By breaking down these numbers and comparing them to your annual living costs, you will be able to get a better idea of how many properties you will need to lead a comfortable retirement.

Choosing the right property management agency

Getting the right advice and support from property professionals is key to the success of any long-term investment strategy. The Perth-based property management team at Rentwest are dedicated to helping Perth property investors make the most out of their investment properties. Whether it’s ensuring your rental rates remain competitive or helping you maximise the capital growth on your Perth rentals, our dedicated property managers can help you take the right steps towards financial independence.

To find out more about Rentwest’s property management solutions, contact us via the Rentwest website or give our Perth team a call on 08 9314 9888.