Retirement
How younger Aussies can get ahead through property
Younger investors who are looking for financial independence should take advantage of low interest rates and the power of leveraging, suggests an industry expert.
How younger Aussies can get ahead through property
Younger investors who are looking for financial independence should take advantage of low interest rates and the power of leveraging, suggests an industry expert.
In conversation with nestegg, Pure Property Investment managing director Paul Glossop discussed strategies younger investors can use to achieve their financial goals through the property sector.
Mr Glossop suggested investors might be unaware of how much they need to retire, with the first step towards financial independence being calculating expenses of their ideal lifestyle.
“Most people get a bit too arbitrary about what they need and throw out the standard ‘I need 100 grand passive income’, and that number can be too much or too little for many people,” Mr Glossop said.
The second step is figuring out how to have a blended strategy to grow the portfolio while paying down debt, Mr Glossop said.
Mr Glossop suggested investors should take advantage of time by exposing themselves to property as soon as they can, provided the numbers align.
“If you do maximise your leverage, recycle, beg, borrow, steal to get as much exposure to good-quality growth assets that have decent cash flows in the early stages because the ability of that to compound and turn into so much more in a short period of time,” Mr Glossop continued.
Depending on where investors start, Mr Glossop suggested the biggest hurdle is getting the deposit together, with investors often waiting years to save up to a 20 per cent deposit.
“The challenge is rarely time; the challenge is getting your hands on a deposit. The bonafide strategies I have seen are accessing equity or guarantor loans,” he said.
“The other part is sacrifice and use lenders mortgage insurance for what it’s good for in the early stages.
“I think people often think they need a 20 per cent deposit available to buy that first investment.”
Property investors should also get creative and look to buy beyond their city, with big markets not necessarily being the best markets to buy in.
“It doesn’t mean because you’re not buying in a city you’re not producing outcomes. It has to be very specific at what you’re trying to achieve as well as where your budget sits.”
To ensure growth in your portfolio, the property investor suggested taking advantage of “the most powerful and unique part of property in this country which is leverage”.
Finally, Mr Glossop advised investors the best way to get ahead is to discuss their situation with an expert as early as possible.
“Inquiring and getting that understanding of what can happen today as opposed to thinking about getting to this milestone before doing something,” he said.
That conversation might not mean you’re going to buy a property tomorrow, but it might mean you get some realistic and time-bound goals, Mr Glossop concluded.
About the author
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