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positive cash flow just because you’re
“Are you planning to live longer than 10
years?” McLellan asks.
“Obviously yes. If that’s the case,
acquire a (capital) growth property.”
2 DON’T LEVERAGE OR
BORROW TOO MUCH
Kingsley advises most baby boomers to be
very cautious about the amount of money
they wish to borrow.
“There’s no debt in the conversation,
we’re buying these things outright,”
“As an adviser, if I’m sitting in front of
someone at the age of 70 with $500,000
in super, I want something that will give
me rent. I would be apprehensive of doing
any type of leverage, definitely no more
than 20 or 30 per cent.”
Kingsley has seen many would-be
clients ask for help in their 60s but
most investors need a 40-year cash flow
strategy. That’s why starting out early is
“A baby boomer needs to understand
where their cash flow is forecast to be.
These things can be dominoes,” he warns.
3 DON’T BE DEBT-SHY
On the other hand, some debt isn’t
necessarily a bad thing, Kingsley says.
For example, a property might still
have a $100,000 debt but provide a
“The reality is it can take anything from
10 years before you turn a corner from a
gearing perspective,” he says.
Wemyss believes baby boomers really
need to step up and embrace debt while
they can. He usually advises gen-Y and X
investors to try and purchase three quality
properties over five years.
Baby boomers might need to do this
within 18 or 24 months, he says.
“Even quicker if possible, because they
only have 10 years left,” he says.
“The property should still double in that
period of time. We don’t want to waste
the next seven years.”
4 DON’T TAKE A BIG RISK
Out of all the generations, Wemyss
believes baby boomers have it the
hardest. They need to take on debt before
it’s too late, which is considered risky. But
they can’t afford to make a mistake either.
For this reason, baby boomers need to
stick to blue-chip property, he says.
“We want to make sure the property is
blue-chip, no punts, and only betting on
sure things. Then, let time do its thing.”
It might take five years to discover
whether or not an asset is performing.
Baby boomers simply don’t have this
time, so they need to get it right within 12
months of purchasing.
5 CONSIDER A SMSF
While Kingsley is more cautious about
starting to invest later in life, Somers
believes it’s never too late to purchase an
investment property, no matter how old
you are. She says a good way for those to
purchase a property today is through a
self-managed super fund (SMSF).
Wemyss adds going from zero to three
properties is a more risky strategy, but it
might be the only opportunity to acquire
properties. A SMSF might help you get
there faster, he says, and in some cases, it
might be your last chance to purchase an
6 STRUCTURE THE LOAN
Somers says structuring the loan correctly
can save you thousands of dollars over
time and help you pay your mortgage off
faster. You should take out an interest-
only loan and only fix a portion of it. Also
make sure the interest rate is attractive
and you can obtain a line of credit.
“You don’t want to pay a principal and
interest only loan at that stage,” she says.
“You could get a loan half fixed and half
variable, which means you can get a line
of credit. Then, every ounce of savings
goes into the credit line (which is held
against the variable loan). This helps
reduce the interest.”
7 CONSIDER THE RENTAL YIELD
Baby boomers also need to consider
neutral or positive cash flow properties,
according to Kingsley. Some don’t have
that wealth and so they’re looking for
property to accelerate it.
But if your income isn’t too crash hot,
you might need to consider the rental
yield and look in safe, regional areas close
to capital cities.
“It might have lower capital growth but
in both situations get a split loan – half
fixed for protection, half a line of credit,
where you can pay it down,” he says.
“You’re in a situation where you need
some equity, real quick. Don’t wait for the
market to go, create the equity yourself by
paying down the loan.”
8 CONSIDER DOWNSIZING
Have you considered downsizing your
family home? You might find you have
considerable equity in your own property
and by selling you’ll make a substantial
profit. You could then downsize into
something smaller and perhaps buy a
property with the remaining cash.
If your block of land has space for a
granny flat, you might also like to consider
embracing the ‘granny’ title.
You might be able to rent out your
own property and live in the granny flat,
or alternatively, you could rent out the
granny flat. Of
course, you could
also move to a unit.
“If you’ve made
your money but
you’re living in an
expensive home, it’s
time to downsize,”
“A lot of middle-
aged people all
park their money in
their own home and
don’t want to move.
But there’s no point
living in a palace if
you don’t have any
cash flow.” API
æAs an adviser, if I’m sitting in front of someone at the
age of 70 with $500,000 in super, I want something
that will give me rent.Æ Ben Kingsley
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