Real Estate & Retirement: How Many Properties Are Enough?

Real Estate & Retirement

How Many Properties Are Enough For Retirement?

If you’re looking to fund your retirement through property investment, then you’ve likely thought about the following question: how many investment properties are enough?

One of the biggest mistakes we see investors make is stopping after they purchase one or two properties.

With the cost of living averaging $52,000 per year for the average Australian single, just to get by, retirees will need 6+ properties to generate a substantial passive income and achieve their financial goals.

Let us explain why.

Assuming a mortgage-free home ownership, Association of Super Funds of Australia suggests couples can enjoy a ‘comfortable lifestyle’ on around $70,000 a year ($45,000 for a ‘modest’) and singles on around $50,000.

Official figures from the Australian Bureau of Statistics show, the retirement phase of life is increasingly long. Women retiring at the age of 64 have a typical life expectancy of another 20 years while for men, it’s 16 years.

Lump Sums at Retirement Over Average Life Expectancy:

  • $3,000,000 /  20 years = $150,000 per year
  • $690,000 / 20 years = $34,500 per year
  • $100,000 / 20 years = 5,000 per year

So if $70,000 per year sounds like your kind of retirement, you will need approx. $1.5 million (not taking into consideration inflation) to facilitate your retirement, and if property is your pathway, your next step is to work out the following:

  • What are your goals?
  • What kind of properties should you purchase?
  • Where should you buy?

Why Property Is The Best Investment Option For Retirement

Investing in real estate for retirement is the safest and most profitable way to secure your financial future. Offering both income and growth, this provides a more stable and reliable cash flow in comparison to other investment choices such as stocks or crypto which are highly volatile, and therefore high-risk. 

While property also experiences periods of growth and decline, the undeniable long-term trend is upward. Over the past 30 years, home values have seen a huge increase of 382%, equating to an average annual compound growth rate of 5.4% since July 1992 as depicted by the graph below:

Defining Your Goals and Determining Your Strategy

Creating a retirement property investment strategy requires careful planning, which all begins with your investment goals:

  • Are you looking for a steady income stream during retirement?
  • Are you more interested in capital growth and prefer a lump sum?
  • Are you looking to set up your children?
  • Are you looking for greater lifestyle?

The list goes on. 

Once you’ve defined your goals, it’s crucial to do your homework on two key components: your finance strategy and your property strategy.

Without finance, you cannot purchase property – and this is a common mistake that stops investors purchasing more than one or two properties. 

Understanding what drives your ability to borrow money from the bank is paramount to your success.

Once you have established your finance strategy, you can begin researching locations to understand where the best places are to buy, and what to look for in an investment property. 

Learning which factors drive property prices, such as location, local amenities, and demographics, is crucial for making informed investment decisions. Purchasing an investment is not the same as purchasing a home, and must be looked at through a ‘business lens’, meaning to purchase what will give you the greatest return. 

Remember, property investment is a long-term game. It’s about growing your wealth over decades, not making quick gains. With patience, research, and a solid strategy, it can offer a secure and rewarding financial future in retirement.

Growing and Diversifying 

As your portfolio expands, portfolio management becomes even more important as you need to be more proactive in diversifying across different markets, managing any potential risks and identifying new growth opportunities. It also involves regular reviews and adjustments to ensure that your portfolio continues to meet your financial goals.

It’s important to keep a close eye on market trends and fluctuations in property prices to ensure your portfolio is always performing at its best.

As you acquire more properties, rental income adds up, providing a steady cash flow to supplement, and eventually replace, your primary income – ideal for retirees. 

Seeking Professional Help

If you’re looking for some guidance when it comes to real estate and retirement planning, our team at AllianceCorp can help you on your retirement planning journey. Our team of experts work alongside you  to help you plan for your retirement and future-proof your investment portfolio. 


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