Is property investment still the thing for retirement. With interest rates up, not to mention rates and insurance is it worth the weekly cashflow hit?
A fairly typical home owner of the day in Auckland, may approach us with a common idea of investing to give some financial freedom in retirement. Looking at the past few decades, the long term gain on property would be around 6%. By using equity in the main home, there might be no need for a cash deposit. The debt repayments are going to be the major expense with this approach.
Using this example you could say for a typical home of $700k with $600 pw rent, cash input of at least $400 per week will be required(including rates and insurance). If the repayments are not interest only, expect more than this. The cashflow load start to ease over the decade as rents are also subject to inflation. However the real gain is over the long term in terms of equity.
This is all very general advice, get in touch with a financial adviser such as ourselves for a better feel.
