You’re never too old for anything in this life.
Well at least that’s my motto – but how do banks, lenders, and the property industry at large regard older investors?
Many people come to me asking if they're too old to invest in property, fearing they’ve missed the boat and will no longer have the opportunity to grow their wealth through real estate.
At the other end of the scale, some investors fail to consider whether they might be nearing the end of their property buying career.
The banks are only willing to lend you money for so long; when they can see ‘retirement’ in your near future, the idea of extending you a 30-year loan term suddenly seems less appealing!
Wherever you are on your property journey, it’s important to consider where you are financially now; where you wish to be financially when you retire; and the timeframe that exists between now and then.
Investing in your 30s (and younger)
At this stage of your life, you’re laughing all the way to the bank!
Well, not quite yet, but if you play your cards right, you will be.
In your 30s, you still have around 30 years in the workforce ahead of you, which gives you plenty of time to build a substantial property portfolio.
Your next step is to develop a smart investment strategy that initially builds your asset base, then once you slowly lower your loan to value ratios as you transition into the cash flow phase of your property journey.
Investing in your 40s
If you’ve blown out 40 candles in the not-too-distant past, then here’s the good news: you are not old.
Far from it!
With a good 20 years remaining as an income-producing citizen, you have plenty of time ahead of you to make some profitable investment decisions.
The earlier you invest, the greater your eventual profits, thanks to the power of compounding over time.
If you buy three properties in your 40s valued at around $700,000 each, they’ll be worth around $2.1million at purchase value and, if you buy the right type of “investment grade” property, they could well triple that value by the time you retire.
Does a $6 million portfolio sound like a strong enough retirement nest egg to you?
Investing in your 50s
When you reach this age, it’s ideal if you have some property assets behind you, but if you’re just starting out then all is not lost.
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Generally speaking, you should be able to obtain 25- to 30-year loans to fund your property portfolio, as most lenders are willing to accept that a person is able to work beyond the traditional ‘retirement age’ of 65.
When starting to invest in your 50s, it’s essential that you have a very clear strategy with ‘growth’ at the top of your priority list.
And you should consider “manufacturing” this capital growth through renovations or development, if your risk tolerance, finance, and experience allow for it.
Investing in your 60s
If you’re in your 60s, keen to start investing and you’re reading this right now, then it’s important to understand the road ahead of you.
The reality of the situation is that starting your investing journey in your twilight years can be an uphill battle.
That’s not to say it’s impossible – however, I would urge you to speak to a property strategist (not someone who sells property but someone who independently advises you on your options), as there are many considerations to take into account.
Investing through your SMSF may be an option, though keep in mind that super fund rules and regulations around profits, investments, and taxation can be complicated and change frequently so this requires advice from a suitably qualified financial planner.
Investing as a retiree
Interesting, even if you are a retiree, it may possible to borrow money for investment purposes – in the right circumstances.
If you have demonstrable income, for example from a sound property portfolio, the banks usually take this into account for your loan application.
However, currently, the bank’s stricter serviceability criteria make it much, much harder to get a loan under these circumstances.
The later you leave your start in property investing, the less time you have to allow your assets to grow and the less flexibility you have if you make a mistake.
That’s why I would encourage you to arm yourself with a suite of investment experts – including a property strategist, a financial strategist, and a property investment savvy accountant to ensure you travel down a path toward financial prosperity, rather than make risky decisions that leave you destitute.
Finally, one fact that remains true regardless of age is this: having a proven, time-tested investment strategy is the single most important factor that will determine your success.
Many people buy property blindly, hoping that their investments will increase in value over the long term, and this is the riskiest strategy of all.
In my view, a great support team, a clear strategy, and a goal for your financial future are the key ingredients of achieving financial freedom through property.