What age is the right age to invest in real estate?

Last updated on November 25th, 2021 at 09:28 am by Bill Tsouvalas

There are over 1.7 million landlords in Australia – that means 1 in 7 of us is some kind of property investor. The common perception is that property investors are young urban professionals. That couldn’t be further from the truth. According to the Australian Taxation Office, upwards of three-quarters of over 45s hold investment properties in Australia. The “Baby Boomer” segment of the population (those born between 1943 and the 1960s) owns 55% of investment properties. The total value of property held in Self-Managed Super Funds topped $24.4 Billion in 2016. So is there a “right age” to start investing in real estate? Can you be “too old?” Or is there no such thing?

Can millennials invest in property?

Despite all the bluster about eating too many avocados and taking too many holidays, millennials (or Generation Y) can definitely get a leg up by investing in property at a young age. By getting your savings and strategies in place early, you can set yourself up to buy property earlier. Once your cash flow increases from advancing in your career or through your business if you’re self-employed, you can portion off more towards an investment property deposit.

The older generation: Gen X and property

Generation X (born between mid-1960 and early 1980s) are at the prime time for investing in property – according to the statistics, it’s this cohort that owns the most investment properties! The earlier you invest, the better. If you buy four properties in your 40s valued at about $400,000 you will have a $1.2 million portfolio. They could triple in value by the time you reach retirement age.

Baby Boomers – harder to invest?

Baby Boomers own over half of the investment properties in Australia, so getting into property at this age is far from impossible. Banks may still lend a traditional 25-30 year mortgage, if you are prepared to work beyond your retirement age (65.) It would be wise to invest more into improving your property – with subdivisions, renovations or further development so you can gain more value earlier on.

Beyond the Baby Boom – too late? Or no such thing?

If you are at retirement age, or approaching it, investing in property directly can prove difficult. Banks are reluctant to lend to people no longer working and/or have no assets to leverage in the loan.

However, one workaround is to invest in property via your Self-Managed Super Fund (SMSF.) This is also a legal and financial nightmare for the layperson, so you will need a seasoned financial professional to navigate negative gearing, capital gains tax, trusts and compliance with ever-changing regulation. If there’s anything to be gained, it’s never too late to invest!



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