The magic number.
There are many voices and opinions which will tell you that you need to amass as much property as you can over your life time.
We’ll let you in on a secret – in the property game, it’s often the case that less is more!
In episode 27, we dissect “How many properties do you need to retire wealthy?”.
Listen as David Johnston, Cate Bakos and Peter Koulizos take you through why 2 to 5 properties is the optimal number for most Australians, why quality trumps quantity and the danger of taking the advice of property spruikers.
- It’s Not About How Many Properties You Own
- The six signs you are dealing with a spruiker!
- Why you need to plan for your future home when buying an investment property
- Why your approach and assessment of risk is paramount to property success! (Ep.10)
- Why the land-to-asset ratio of a property can determine its future price growth
- How data can help property investors identify gentrification before it happens
- Making the first move – why the first property you buy is the most important of all
- The critical mistakes of property investment – starting without a plan
- House hunting is a compromise so target the most important factors
- Develop your Property Plan
- Why rentvesting is more affordable than buying a home to live in (and why it’s not for everyone)
- The top 5 mistakes property investors make
- Great to See ASIC Cracking Down on SMSF Property Spruikers……Finally!
- Why you pay for spruikers promoting poor property assets
- Why short-term investing has long-term consequences
- How our mortgage strategy helps us to hold properties
- Mortgage Strategy 101 – Ep 3. Holding Property
- Five mortgage strategies that can grow your wealth
- Property Cycle Management – why now is always the best time to buy if it suits your personal economy and you have a long-term property plan (Ep. 12)
- Why your Mortgage Strategy is more important than your interest rate! (Ep. 9 )
- Choosing whether to hold or sell investment property
- Questions to ask when buying an investment property
- How to succeed with Property and Create your Ideal Lifestyle
- Mortgage Strategy 101 – YouTube video series
- Less is more! While many people think that they need to acquire as much property as they can, often the case is that a few carefully selected high quality properties will set you up for retirement.
- 2 to 5 properties is the optimal number for most Australians.
- Beware of property spruikers – they will tell you 6 is the perfect number. No, 10. Buy more! After all, they are most likely selling you property, so they have a vested interest in the purchase.
- The facts: 9 out of 10 people retire owning one or no properties. 10% of the population own investment properties and most own 1 or 2. Those who own 3 or more investment properties are a very small percentage.
- 8% – own one investment
- 1.42% own 2 investment
- .43% – own 3 investments
- .16% – 4
- .065% – 5
- .068 – 6 or more!
- Stay tuned for the Property Planner’s gold nugget on the 7 factors for success as to why 2 to 5 is right number for the vast majority
- Funding your retirement – if you had 3 relatively affordable properties, you would need a plan to sell them to live off the equity. If you wanted to be fully supported by rental income, you do need 8-10 properties.
- Selling to fund your retirement – your aim should be capital growth and time.
- Stage of life – if time is not on your side, you may not have the luxury of picking a strategy like this. There will always be people who are outliers and need to focus on lower price point, high rental yield and different time scale.
- The flexibility stage of life is the new ‘retirement’ – this is a trend of people scaling back employment rather than just stopping.
- At this point, you’re making a lot of decisions through the transition to retirement years, just as you are through the accumulation phase of your life time. Staggering these decisions will benefit you, as the longer you are able to hold before you sell, the more the properties will grow in value.
- Diversify – your retirement will be funded by many different investments – you will have super, a family home that you can downsize and other investments outside of this. Whichever asset classes you choose, you want to make great decisions.
- Young couples and singles – take action now! If you wait 5 years, you may have more buying power. Having children will slow you down on your buying journey. The best thing for property investment is time in the market. You may not be able to get into the period home within a 10km radius of the CBD, but you could get a townhouse in a good location.
- The bank of mum and dad – we see a lot of reluctance on the part of parents to sell down to fund their retirement – because you want to leave something to your children. But there are other ways you can help – providing equity for your children to borrow so they can buy their first home with a helping hand. Help your kids while you are still alive!
David Johnston – The Property Planner’s Golden nugget: Why 2 to 5 properties is right for most hard-working professionals.
- Time is our most precious commodity – the more properties you own, the more time you will spend each year managing these properties.
- Tolerance for risk – to own more than 5 properties means that you have to take on a high level of debt. Most people have are neutral to conservative when it comes to risk tolerance.
- Cash flow management – managing your money and maintaining surplus cash flow to be able to make investments in subsequent properties becomes a challenge the more properties you own.
- Lifestyle priorities– the home is often the largest investment someone will make and is often the most important purchase, meaning you spend more. This restricts the number of properties you can afford to purchase.
- Enjoying life: most people like to spend time with their friends and family. Purchasing property eats into your spare time, chewing up your weekends and evenings.
- Purchasing quality property – selecting top quality property is difficult, the more you purchase the more risk you have of getting it wrong. 3 well selected properties will beat 6 poor ones any day.
- Creating wealth – owning 2 to 5 properties at retirement will create you enough wealth to be in the top 1 or 2 percent of Australians.
Peter Koulizos– The Property Professors’s Golden nugget: The key to creating wealth and retiring well is capital growth.