Planning for Retirement Properties

The best retirement properties to invest in depend entirely on your own individual circumstances and how far into retirement you are.

Capital Growth Retirement Properties

If you’re investing near retirement age or at the start of your retirement, it’s likely that you’ll be looking to invest in a property for capital growth. This is because you won’t typically hold on to the investment for enough time to maximise rental returns but could see exceptional price increases over the short-term.

In this case, you’ll be looking for locations that are forecasting growth or receiving substantial investment into major infrastructure projects. It can be useful to look for emerging locales that are more affordable but predicting fast-growing prices such as Derby, where you can see short-term capital growth.

Rental Yield Retirement Properties

If you’re starting to plan your retirement investment at a much younger age, it can be a great idea to focus instead on rental returns and yields. If you can invest early in a location with consistent tenant demand, you’ll be generating exceptional returns that could lead to a much wider property portfolio over the long-term.

This is because regular rental returns can help you scale your investment effectively, leading to more properties that are potentially ‘self-sustaining’. When you then hit retirement age, you’ll have a portfolio worth much more than the capital you invested that is delivering pure profit.

Consider also what type of property is likely to be in the higher demand and by who. If you’re buying in or close to a city, then apartments may be the most sought-after properties and, depending on the area demographic, it may be that a property suitable for sharers is the best buy.

What you look for in your retirement properties ultimately comes down to what you’re looking to achieve but there are some fundamentals you should consider.

The first is location and demand. Getting a handle on the demographics and performance of an area can help you tailor your plans and make more informed decisions throughout the investment process.

Another vital aspect is build quality. If you can find a development that has amenities, or simply features some of the top interior specification in the local market, your investment will stand out from the crowd, reducing the potential for void periods.

Finally, consider how your retirement property matches up with your own personal timescales. If it’s an off-plan property you need to factor in several years of build time before you start generating rental returns.

For the most part, investing in retirement properties will be a largely similar process to investing in any other investment property.

Where extra consideration may be required is when we consider applying for a buy-to-let mortgage in later life. It may be that you need to apply for a specialist buy-to-let product, which will likely require going to a specialised lender.

It can also be a good idea to work with a partner agent to manage the property, especially if you’re also working a day job. This could be a lettings agent or property manager that can take many of the daily responsibilities off your hands, leaving you to enjoy the fruits of your investment.

When it comes to finding your ideal investment, the best retirement properties will depend on your investment strategy.

This is where property forecasts can be incredibly useful, highlighting areas that are either forecasting property price growth or rising rents. It helps that these metrics are both driven by similar qualities – supply vs demand, regeneration and nearby amenities.

Supply and demand in particular is very important to consider. As demand for rental accommodation continues to grow, finding these key areas is a great way of planning for long-term returns. City-centres (and likewise, the apartments within them) are currently one of the most popular locations for investment, offering versatility and consistency.