Oct
2013
It is a human fact. We will all retire in our lives. Property prices WILL increase.
Investing in a Retirement property, in my view, makes sound financial sense. When you retire you do not have the convenience of an annual increase in salary. The cost of living is guaranteed to increase and a safe way to counter this inflation is by investing in retirement property.
Magnus Heystek has some reservations regarding Buy to Let investments and some of the arguments are valid, but overall I have to put forward the case of a constantly changing economy and current affordability of property. It is true that returns are not great but being retired is a given.
How should one then approach the limitations of owning retirement property? There are many factors to consider, and most important is your health or future health. Retirement usually means down-sizing to a more manageable property. This could entail a new bond, and at retirement age one should be enjoying the fruits of your labour and not servicing debt. It will always be a trade-off between present and future value and present affordability. There are retirement schemes that have exclusive use registered to it. The only limitation then is that those properties can only be used to accommodate retired persons. How do you then own a retirement property when you are not yet retired? Should you have parents that will be retiring, consider a joint investment in a retirement development. While your parents occupy the property the bond is shared and your investment is secure. Some, or most of these retirement villages cater for the needs of the retired people such as doctors contracted to the village, communal dining etc. If your parents do depart for greener pastures, you are will be in possession of a retirement property and you can then opt to let the property to retired persons. The bond, if there is still one against the property, will be serviced and the value still escalates. By the time you retire you could opt to occupy the property, sell it off at a profit and purchase a new retirement property of you own at a nominal cost.
These retirement villages are well maintained and do not generally end up with "reputations" as some suburbs do.
Buy to Let have its benefits. This market segment behaves like the other property markets where supply and demand are driving factors.
This is a form of "investment" for future generations, and also a cost saving one.
