I need to supplement my retirement funding with property investment – what should I buy?

When you consider that around 80% of Australians will retire on insufficient cash flow to have a comfortable retirement, the answer is likely to be, one which will provide the necessary cash flow, however one property may not be enough.

In addition to the required cash flow, a retiree may seek to live in a location supporting his/her favoured life style.

If you like to play golf, enjoy fishing, bushwalking, and perhaps accompanying the wife to a good movie and a host of favoured activities, the location becomes a little clearer. There is also family and friends who visit regularly. You will need to have a place large enough – but not too large – to accommodate them from time to time.

From what I am told your current home is very comfortable but large and two stories. This may be a cause for you to downsize at a later stage in life.

Your preferred location is likely to be close to the water, great views, access to major shopping and health care, in an area populated by people of some means.

It will be single story.

My recommendation to you will be that you should consider a duplex property close to a major waterway and not too far away from Sydney where your close relatives reside.

You ask why a duplex

The duplex plan that I have in mind would be built on a lot selected by you in a location preferred by you where the main unit is 200m2 with 3 bedrooms and the adjoining unit 150m2 with 2 bedrooms. Both are completely self contained with a fireproof and soundproof wall separating them. The design of the building is such that it appears to be a large home. The builder is designing a feature to allow it to be converted into a single 5 bedroom dwelling at any time.

The building will be designed to include all of the features preferred by you, upgraded as the years pass, and will be built with owner/occupier specifications and inclusions. The quality build and the included features should result in increased rental income.

We recommend that the builder is instructed to include some of the features of AS4299, the Australian Standard for disabled occupants. Wider hallways (1m) and doorways, larger bathroom with provision for bench handles and a disabled friendly toilet and shower.  If necessary the kitchen fit out can be completed at a later stage if needed.

In my experience tenants love these features, particularly the large bathroom.

The building will be placed on the land to allow for a pool and a caravan.

Over the rental period the rental income and taxation allowances will pay for up to 90% of the cost of the building plus capital growth in an upscale location which will double the value at least over 25 years.

The overall effect of these numbers is that as long as interest stays below 7.25% the cost to you of the building will be negligible.

At the time when you are ready to take occupancy a complete do over is completed and you enter your new home with a value exceeding $1,400,000 with minimum upkeep required.

The second unit can be maintained as a rental or utilized by yourselves to accommodate family or friends. If at any time you wish to sell you have options which are to leave the configuration as is or convert the building into a 5 bedroom home.

A major attraction to investors is the two rents and two schedules for depreciation.

We have done all of the numbers. I can assure you that they are very attractive.



The information provided in this document is not intended to constitute financial advice. Appropriate professional advice should be obtained by any person prior to acting upon any of the information contained in this document.

Don Duncan F.A.I.M.

Don Duncan F.A.I.M.

Principal Consultant

Don is the Principal Consultant at Meredon Consulting, with over forty years experience in developing successful residential property investment strategies, and extensive experience in the financial sector, Don is uniquely qualified to provide you with the best property investment advice available. He is supported by experienced property investment consultants in both Brisbane and Sydney. Don is a Fellow of the Australian Institute of Management, and a qualified Trainer of Trainers. In addition to this Don has also been an active member in the community, he was a member of Rotary International and Past President Toastmasters Territorial Council of Australia.