The more properties you own, the more rental income you’ll make, and the more capital gain you’ll acquire. When you accumulate more wealth, in theory, you can retire early or earlier.
But the reality is most people cannot buy properties endlessly.
So, how many properties do you need to own to retire early?
I believe you need to own three properties, almost mortgage-free, at a minimal.
If you invest in three properties for a minimum of 20 years, your mortgages should have been mostly paid off. That’s if, you do not incur more bad debt, declare bankruptcy or default on your repayments.
Over 20 years, these three properties will double in value, despite some periodic market fluctuations.
Hence, your ‘early retirement’ strategy should be to sell off property number one. Use the profit from this sale to pay off the mortgage on property number two and property number three, if possible. You live in property number two, mortgage-free, whilst earning a rental income from the property number three.
The more properties you own, the more rental income you’ll make to retire early.
Housing affordability is a problem
So, you think it’s not possible to afford three properties? Housing affordability is a serious problem for the younger generation and low-income earners.
But, if you cannot afford to buy where you live, then you need to look elsewhere. Period.
Step out of your comfort zone and explore other affordable regional or international property markets. Everyone can afford to buy a property – just not always in the first town they select.
You should not be deterred from investing in property markets away from capital cities. A good rental yield is achievable from many different types of properties and markets.
And, remember, the earlier you invest in your life, the more time there is for your investments to grow.
Why property is a better investment than your pension – if you want to retire early
Supplementing your investment portfolio with other income steams, such as your pension (or superannuation) is very important.
Many people believe it’s better to invest in your pension because your money is ‘protected’ by the Government. Pensions do help millions of people save for their retirement. But, you have to wait until a certain age before you accessing your savings.
And, unfortunately, Governments will continue to increase the national retirement age as people live longer. The Australian Government is expected to increase the retirement age to 70 years old by 2035. You might not even live until this age.
The profitability of your pension is influenced by the stock market. A global recession could reduce your pension to nothing. However, bricks and land will never be worthless even if the property market crashes.
Owning properties allows you to take more control of your financial future because you control your own assets and how you generate income.
So, to retire early, do you believe that owning three properties is the ideal goal?
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