What’s the Right Age to Start your Property Portfolio?
Although age provides no barrier for a property investment, it’s best to make your move as early as possible. This is simply because the longer you hold real estate for, the more likely long-term gains will be made.
This shouldn’t necessarily deter older investors, however. Some managed lets within the buy-to-let sector provide guaranteed rental yields over 3-5 years’ time – a perfect way to strengthen your retirement funds with no hassle and very small risk involved.
Either way, the basis of a successful property purchase remains the same; location and demand. Your age shouldn’t be too much of a decisive factor in the investment, especially if you have an experienced estate agent on side who’ll oversee the process.
Many property experts recommend getting on the ladder as soon as financially possible. The UK property market tends to hold up, even after significant events such as Brexit, so the chance of you losing money in the long-run is relatively small.
According to PwC, one of the world’s leading professional services network, house prices will increase by an average of 6% by 2019. This will placate to around 5% growth by 2025, fuelled by persistent supply shortages. Property looks a safe bet in the UK.
With the typical length of a mortgage being 25 years, this is more reason for younger investors to swoop early. Once paid off, you’ll have more time later in life to relax without the constant strain of bank repayments.
As your intention is to start a property portfolio, there’s increased opportunity to acquire further properties down the line. Doing so means you’ll have the equity to obtain additional buy-to-let mortgages, as well as providing income if one property sits vacant between tenants.
Of course, the property game is one with a series of ups and downs, and you may not get everything right straight away. However, starting early means you’ll gain experience as time goes by, recognising when to invest and when to sell throughout positive and negative property cycles.
As noted, there’s nothing to stop middle or pension-age investors starting a property portfolio as well, although obtaining a buy-to-let mortgage will be trickier. Lenders impose stricter regulations for older borrowers, with a typical age limit of 75.
Older buyers are more likely to have expendable funds at their disposal, negating the need for a mortgage in any case. Most sellers prefer a cash payment route, providing you an extended pool of options and a far quicker transaction time to boot.
For those in retirement, playing the property market is an exciting venture and can provide a fantastic boost to your quality of life. As well as initial short-term rental income, you’ll also have something concrete to leave behind for your loved ones.
In conclusion, age shouldn’t be a factor if you’re looking to begin a property portfolio. However, taking the plunge as early as financially viable is recommended as it provides better access to a buy-to-let mortgage, more chance to recover from a downturn, and increased opportunity to grow your portfolio over time.
Older investors shouldn’t be put off however, especially if they’re cash rich. As many investment opportunities for managed lets are cash-only, this provides you access to properties that guarantee short-term rental yields as high as 10% in some areas.
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