Susan is joining us to talk about property issues over 50. She is looking forward to your questions to be answered in future articles.
Your’e in your 50s, maybe even older? Do you find yourself wondering how long you have left to enjoy your life to the full and whether you should really be living in that big old house or even little old house, but in a different place?
And that brings me to thinking about what do we really want now we’ve reached the 50 age mark or beyond. Idon’t know about you but I feel exactly the same as I did when I was 30 and they were my best years by the way. So of course that means the rest of my life hopefully will feel like my best years. I have the energy and the time to enjoy them. Is now the time to think about moving home, downsizing, increasing our property portfolio? We all have different priorities, different incomes, different plans.
Looking at property as home, investment and pension
Home ownership these days is something of a different ball game. We have looked at property in the past as investment for our future, our pension, a home for our growing families. Unfortunately life is different (apparently it was all our generations fault) and our sons and daughters are finding it increasingly difficult to find their way into independent life; the average age of a first time buyer now is 41! Shock horror, will they be living with us all of that time?
So now might be the time to plan the best way to bring those dreams into reality and hopefully in a way that
the whole family can enjoy.
We need to look at options that our parents never had or even needed to think of. Some of these thoughts might incorporate downsizing and helping our children make that first move whereas we might at one time have thought we could have downsized and lived very different lives now that we have more time and less calls
on our finances.
Personally, my plan includes buying a second property in another Country, in my case Vermont in New England. My husband took early retirement and we inherited some money. It seemed to us that as we get more time to “play” we could live in that second home in an area that we love, close to other family and know that we can take skiing holidays but also other activity breaks at different times of the year.
More importantly I can see my Canadian cousins more regularly than on Facebook or brief visits. Even more importantly, my daughters love the area and I know it will be a good investment for them to take holidays in the
future that won’t cost quite as much because they have the accommodation . One day they too will inherit
that property, hopefully at an increased value.
Don’t put all your eggs in one basket
If you take that route, it should also be part of a plan, an investment with regard to whether you can rent it out to cover running costs and maybe a small income. Look at the area you intend to buy in, will it be somewhere that will experience increases in market value over time and not fall on the wayside like some European countries such as Spain where I know some have lost huge amounts of money on their properties. Their investment for the future has been lost and it must be heartbreaking for them. One must always bear in mind the likelihood that something like that might happen; don’t put all your eggs in one basket. If the purchase was part of a plan to live somewhere that fulfils your soul as well as become an investment too, then that is good anyway. These days
property should be seen as a long term plan, not necessarily a money making machine….
As a property expert myself, I like to think I won’t make those mistakes but of course there never is a guarantee!
Some people might buy property to rent out in this Country and create an investment vehicle to add to their pensions. Again, there have been some downfalls in those markets when our own property market had a huge
crash. Once more, know your area, look at transport links, schools etc. These all add to the safety of your property value if there is a downturn but also to the ease of renting. Nobody wants to buy or rent a red herring. Look at how many new properties are being built in an area. In my area, the trend has been to build apartments, huge amounts of them, even more being built still. Investors buy these properties to rent out, at first commanding quite high rents and thinking that they have really “lucked out”. Unfortunately in most cases, like buying a brand new property that has an initial value because it is new, the same goes with renters. Always the brand new rental property can command a higher monthly rent and a quicker uptake of renting it out. As time goes on, it becomes older and tired, more new properties are built, they don’t command such a high rent and equally they may lay
empty for a few months of the year and then your investment compared to savings rates (which
we all know is extremely low at the moment) become less and less. if you have to take into account running costs, any payment you may have to make to a lender if you took that route, and capital gains tax, selling costs etc in
the future, these all have a huge effect on the amount you have made over a year. Unlike in the past, property values are not increasing quite so quickly and you can’t look on any property investment as a short term, make
money quick, enterprise.
Buying an investment property
Remember also not to buy investment property that you’d personally like to live in. None of us have the same
taste or needs. Buy an investment property that will stand out from the crowd to appeal to a wider audience, buy one that fits most circumstances and as I said before, look at things like schools and transport plans for the future if not already in place. Some people rent in an area just to get a school place. Transport links are hugely important, not just for the person who’s renting but for future value increases or at least to hold their value when the rest of the market is taking a downturn in.
I have always had a passion for property and love to watch those programmes where some want to downsize and buy a property abroad but fail to think about whether they really want to sever links with their homeland. I know of people who have sold up, moved away and deeply regret that decision. As we get older, we rely on what we know more, friends, amenities, availability of medical care etc. We probably shouldn’t sever all links. Maybe buy abroad and then buy a small property here that you can rent out while you’re not in the Country. I have friends who bought a property for their future. When they retire they plan to move abroad but already have their apartment here to come back to. Its a great property on a marina, overlooking a canal with great double sized balcony. They bought off plan and unfortunately at the time the market took a dip and it still hasn’t returned to the
price they paid. However it is a supreme rental property. I never failed to rent
it out and by the time they retire (they are just 50 now), it will be at least worth what they paid, will have paid for
itself in the years leading up to it including a small income and an ideal property to use as their UK base. As I said, don’t look for immediate gains. Property these days has to be a longer term investment.
I have also read recently of a couple who took early retirement and went on a Round the World trip. They rented
their house out and used the rent to finance the trip. Of course, make sure you don’t get captured by Pirates while at sea but more importantly make sure you’re home insurers know you’re renting out to make sure any unforeseen eventualities are covered also. You don’t want to come back to more problems.
If you have the time and the skills obviously, look at Auctions in your area and maybe buy something that needs
renovating. If you’re lucky enough to secure it, and do so wisely, you might be able to
renovate and then either sell on (with a quicker profit if you’re cute) or rent. Once again, be careful about the area
and desirability, take into account how long it will before its ready to rent or sell, These are calculations you need to make for the income you will get if using your own money and it being out of the money markets to buy. If you’ve acquired a buy to let mortgage, calculate how many mortgage payments are made before you
actually receive rent.
Finally, I read a question on a financial webpage (lovemoney.com) asking how somebody could take out a mortgage and buy a property for their parents! Maybe some of us can just hope our children are doing well and want to look after us in our old age. Make sure you’ve been good to them. I read a joke Birthday card the other
day saying “Be good to your Parents, they get to choose your Care Home” or maybe they’ll just get you a mortgage instead.
Picture credit: freedigitalphotos