Property investment: one is never enough, say Australian landlords

Australians hoping to retire comfortably on the back of a single investment property are likely be disappointed. So how many should investors aim to own?

Australians hoping to retire comfortably on the back of a single investment property are likely be disappointed, new research suggests.

At least two are required, according to investors surveyed by online marketplace LocalAgentFinder. However, factors such as superannuation also play a huge role.

When asked how many properties people felt would allow them to retire comfortably, 17 per cent said one, while 44 per cent said they would like two or more, and 39 per cent said they did not invest in real estate.

Almost 10 per cent of people believe four or more properties are necessary to retire comfortably, but finance specialists say the number varies widely depending on multiple factors and lifestyle choices.

For example, one $4 million property may work, but two $600,000 properties may not provide sufficient rental returns and also deny the owner any age pension because of the assets test.

MBA Financial Strategists director Darren James says one property is unlikely to produce enough income. Picture: Supplied

MBA Financial Strategists director Darren James says one investment property is “definitely not enough” if it is your only retirement asset.

“It’s not going to give you enough income,” he says.

“But it might be if you have super and other assets. Super is now the biggest asset many people have.”

Retirees have options such as selling their property to boost their cash reserves, or living off income generated by rent, James says.

The average capital city asking rent is $633 a week – ranging from $514 in Adelaide to $744 in Sydney – and has risen sharply in the past year, according to SQM Research.

A single age pension is today worth $513 a week, while a couple receives $774 – potentially more than one investment property would deliver after holding costs.

The median superannuation balance for Australians aged 60-64 is about $180,928 for men and $139,056 for women, super industry group ASFA says.

LocalAgentFinder CEO Richard Stevens says investors should understand property’s income, capital growth and their local market.

“Don’t be distracted by macro commentary about what’s happening in the Australian landscape,” he says.

“Do your research – understand the area where you are looking to purchase, and what the future growth and rental return is likely to be,” he says.

“It’s important not to overextend yourself. Avoid taking debt into retirement.”

Stevens recommends having a good support team including a financial adviser and other professionals, and “the power of the real estate agent is critical too”.

“And don’t set and forget – no one should care more about your asset than yourself.”

Originally published as Property investment: one is never enough, say Australian landlords