What Type Of Property Investment Is Good For Your Retirement?

When you plan investments for your retirement, you need to choose the assets in such a way that it also fulfils your regular income needs. 

Amit Sethi
October 16, 2023
Property Investment

Property Investment

If you plan to invest in the property considering financial needs in retirement, you must choose the property very carefully. Property investment requires the involvement of huge amounts of money; therefore, you may not make any mistakes. Here are some important aspects you should remember when choosing a property for investment for your retirement.


Search For A Property That Promises A High Rental Yield

When you invest in a property, you can earn two types of returns. First, the capital appreciation for the period you remain invested in the property, and second, the rental income you can earn by letting out your property. If your priority after retirement is to earn a regular income, then rental yield should be top on your priority list. Depending on the category of the residential property, its location and features, the annual rental yield normally varies around 2 per cent to 4 per cent of the value of the property. For example, if you have invested in a residential property worth Rs 1 crore. You can earn around Rs 2 lakh to Rs 4 lakh per annum as a rental yield. The higher the rental yield offered by the property, the better income it can generate for you during your retirement.

Choose A Location With Good Property Demand

Avoid investing in a property in a location which has a low chance of attracting buyer’s interest. For example, usually, a residential property buyer prefers property in a location where there is sufficient social and physical infrastructure in place. Connectivity through road and rail also increases property demand. Higher property demand will help in better capital appreciation and give you a better return on investment when you plan to sell the property in the future. 

Prefer A Ready-To-Move-In Over Under-Construction Property

When you are close to retirement, it’s better to invest in a ready-to-move-in property compared to an under-construction property. An under-construction property may look attractive in terms of pricing, but it comes with a risk of delay in possession and may lack infrastructure support. Ready-to-move-in properties can offer you a rental income from the first month of possession, and there is no risk related to construction delay or ambiguity on the quality of construction.

It is better to plan property investment as early as possible in your career so that you can close the home loan well before you enter the retirement period.

The author is an independent financial journalist

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