Buffett in the description of the life of Warren Buffet Biographies “snowball” a book, Buffett’s favorite analogy is:

The accumulation of wealth is like a snowball, the most important thing is to find very wet snow and long slopes.

In this metaphor, very wet snow represents your wealth base and asset variety, while long slopes represent the power of time and compounding.

Time is also a very important factor in real estate investment, and the value of any property can have incredible growth over time under the magical effects of compounding.

However, for an investor who has recently retired, or is no longer young, they have lost the most important part of their investment – that long slope.

So what is the difference between their strategy and a young, white-collar worker for those who are no longer young or have just retired to just understand that they need to invest?

Alternative “middle age crisis”

In addition to the bottlenecks that traditionally we may encounter in mid-aged people in their careers and in family life, more and more people in Australia are equally financially exposed to the “middle age crisis.”

Because living conditions in this country are so superior and social security looks perplexing, many people are not until retirement until they realize they are not in fact prepared for their old age.

Most Australians have a balance of less than $ 100,000 in their Super account, but their average life expectancy is now over 80 years old. Do you want to survive decades of retirement with these money? No game.

I have seen many Aussie retired around to work after I retired to make money everywhere, and some even did not dare to retire, because there is not enough money for the elderly.

While such a phenomenon is much lower in the Chinese community, there are equally many people who do not have any cash-generating assets other than housing.

Some people suddenly start “resuscitation” at the age of 50, saying that they should invest in real estate and rely on rent to provide for their old age. For these elders, though I want to give my best appreciation for their investment awareness, I still have to sincerely ask: Did you go early?

However, since such a phenomenon is not uncommon, there is still a chance of salvage for friends who, though middle aged, still have some time to retire. Then we come to help them come up with ideas to see what people are middle-aged real estate investment strategy.

case analysis

Mr. A and Ms. B are a pair of couples who know the age of fate. There are a set of self-owned houses with a value of 700,000 and about 100,000 remaining mortgages. Children have been working economically. AB couple family income of about 120,000, no other major assets and liabilities.

For those who reach the age of 50, but have never done so, the first step in real estate investment at this time is a huge psychological challenge. Of course, at this time they also have the option to do nothing and continue their efforts to pay off the loans from their own homes. But at the cost of doing so, after 10 years, when they retire, they will have no passive income for retirement except for one set of self-housing and tens of thousands of super.

Therefore, to avoid such a situation, AB couples can start their investment journey while they are still able to afford the mortgage.

Preparation before investing

Many real estate investors the first mistake is to come up to find housing. In fact, to be a good real estate investor, more important than finding a home is to identify a suitable investment strategy and a good investment team.

Specifically, AB couple at least find a house before you should do the following things:

Looking for a good loan manager, will be from the housing for Equity Release. In theory, AB couples can set aside more than 400,000 additional funds for investment. At the same time, they should ask the loan manager to set up the right loan structure and understand their own ability to borrow.

Find a good tax agent, analyze their tax structure, are there any possibilities to set up an SMSF investment, and consider whether to do PAYG Variation to maximize their cash flow.

Find a good real estate investment analyst to understand the real estate market and the investment strategy that suits them.

Strictly speaking, not only for the over-aged investors, these steps should be done by all real estate investors at the beginning.

However, for those who have started investing in middle age, this is even more a step that they can not miss. Because time is already their “enemy” at this time. Young people buy the wrong room, maybe there is still time to correct, anyway, young is used to make mistakes. But as an old friend, investment goes one wrong step, and the cost of recovery will be much greater than that of young people.

Middle-aged investors buy a house strategy

Having said that much, what we have repeatedly emphasized is the sense of urgency among middle-aged investors over time. Due to their short retirement time and their lack of time, I recommend that middle-aged investors want to buy real estate with significant potential for value-added. Specifically, the following points for reference:

First, a significant proportion of investors in Australia like to buy real estate with high rental yields. These properties are usually in the regional area, and although yields are good, the prices in these areas fluctuate too much.

Investment property since the ancient times the first goal should be Capital gain, if only the pursuit of rental yield, big investment dividend-type stocks or financial products.

So, on location, I would advise them to go to the capital city to invest in the types of properties that will attract private ownership.

Second, the first investment house bought by middle-aged investors is especially important. In Australia, many investors can only own a set of investment houses because: the first set to buy smashed.

Sellers often say a word: the house rose one hundred thousand more than you earn a lot easier. If yes, but the premise is that you have to rise ah.

If the first house does not buy up, investors are generally profitable, so many people can not buy a second set, or lose confidence in real estate investment. If the first set of real estate value-added good, then the use of refinance policy, you can speed up the establishment of the portfolio.

Third, if you can, add value.

For middle-aged investors, if some simple decoration or renovation, take the initiative to create some equity, then it will speed up the pace of your house value-added.

Buy, Renovate, and Hold, is a good strategy for middle-aged investors, after all, who made your “slope” not long enough.

Learn to control, happy investment

For anyone, the risks in the investment process are unmanageable, especially for older investors.

Due to the late start, some middle-aged investors tend to “overcorrect” and set an investment target that exceeds their capabilities. In fact, it is unnecessary.

You know, what kind of real estate has always been more important than how much real estate you have.

You should be willing to prefer only two very good value-added properties of investment grade, do not ten poor performance, only to bring you a lot of Bill’s house.

For example, you may be more aware: a set of 500,000 real estate value added only 7% a year, then 10 years after its value to 983,500, the value of 483,500; and three sets of the same value of real estate, If only 2% of the value added a year, then three suites ten years, the total added value of 300,000.

Finally, while it is important to invest and create wealth, do not forget to keep enough money in your offset account to enjoy life, travel with your family, and laugh at your friends. Because no matter how good the house is, it is nothing more than a tool for our good life. It should not become the goal we seek.