Just because you're pushing 50 or well into it already doesn't mean you should give up hope of building a property portfolio you can retire on. Nila Sweeney, managing editor with Property Market Insider explains.

While there are obvious challenges such as the shorter time in the market as well as potential difficulty in accessing finance, you can still succeed as an investor even if you started late according to our experts.

'It's absolutely still realistic to build a portfolio at this stage,' says Margaret Lomas of Destiny Financial Solutions.

'When people think of retirement they usually think that, on the day of retirement, whatever they have invested in they will need to liquidate, to drawn upon for living expenses or to top up a pension benefit.

'In reality, most people have some money in super, even if it is a smaller amount.  And so most older property investors can use super funds to top up their retirement income. This way, they won't need to start drawing down from a property portfolio until possibly 5-10 years into retirement - at which stage they have had a further 5-10 years' exposure to a growth market.'

How it works in real life

Lomas explains:

'If you have say 10 years to go before retirement and use this to acquire a large portfolio you can safely afford, then you can often use the 5-10 years post-retirement to see that portfolio grow and become even more positive cash flow, as rents increase.

'Many investors find that after 10-15 years, a property portfolio can be nicely positive cash flow, and that cash flow continues to grow as rents grow.  Often investors find that liquidation of a soundly cash flow positive portfolio is not necessary once they reach retirement, and so they can keep them and continue to see an improvement in their net worth over time,' says Lomas.

But there are traps to be aware of

There are a number of pitfalls waiting for any investor, however those who are approaching retirement could be more susceptible. These include:

Temptation to risk entire wealth position to make up for lost time

At this age, and having a feeling that you may have missed the boat, you may be compelled to risk your entire wealth in the hope that you'll catch up.

This could mean putting all your money into buying speculative investments such as off-the-plan apartments or buying in areas with good cash flow but limited growth. Resist this at all cost.

Falling prey to spruikers

When you feel you're running out of time, it's easier to become a victim of a spruiker who promises an easy and instant solution, says Lomas.

'As such, you could find yourself trapped into a poorly performing asset, such as an off-the-plan apartment in an oversupplied area,' Lomas explains.

'If you're in this demographic, beware of buying high yielding properties in one-industry towns where there is speculation and high risk that you may need to liquidate at a time when the market in that area is subdued or falling,' warns Lomas.

Ignore sound investment strategies in order to go faster

Ben Kingsley, author and director of Empower Wealth, points out that older investors may be tempted to go too fast and ignore the much-needed due diligence and planning when starting their investment journey.

'Try not to speculate with short-term investment horizons. I strongly believe that short-term investing in property is 10 years, so if you can't afford to hold it for that long, then I'm not so sure investing in property is the right thing to do,'he says.

Strategies to help you invest safely
 

1. Avoid speculative properties

While it's tempting to take on more risk at this stage, it's important to stick to fundamentals when buying an investment property.

'I recommend not trying to be too clever and not buy speculative properties which may or may not do well in the future,'says Lomas.

'Look for lower risk property in areas with an abundance of families and lots of infrastructure rather than buy risky properties such as holiday properties, niche market properties or vacant land.

'Buy properties that are in high demand in areas with lots of the family demographics with a proactive council and a fast-growing population.'
 

2. Aim for reasonable yield

Avoid chasing just high yields as these properties tend to be located in areas with limited growth potential.

Equally, don't buy a property with a very low yield in the hope that it will give better growth, otherwise you could find yourself having to sell before the growth comes.
 

3. Work out how much debt to take and how to pay it off

Being clear about how long before your income stops is important if you plan to borrow to invest says Kingsley. 

'No aspiring retiree will be able to retire if their property investment isn't covering its own costs and returning a passive income. You need to work out the appropriate level of debt to take on and the strategy to pay this debt down.'
 

4. Figure out how much you realistically need to retire

You also need to be clear about how much wealth and income you're going to need to live what you would consider as a 'comfortable' retirement.

'Let's face it: for each of us this will be a different amount, so doing your numbers to work out what this is and then working back with your investment planning for this point in my view is the only way to work out the best strategy to adopt for one's investing,' says Kingsley.
 

5. Keep leverage low

At this late stage, Kingsley points out that it would be too risky to take on high debt.

'It really is a case-by-case approach as to which strategy is going to be the right one for each household. That said, I don't like seeing baby boomers taking on high levels of debt at their age, so I'd be recommending gearing levels no higher than 50% of the value of the property, which should see the property generating surplus cash flow from day one.  I'd be looking for properties that don't have high holding costs that eat away at the passive income.'
 

6. Don't ignore capital growth

While cash flow is important at this stage, capital growth should still remain a serious consideration according to Kingsley.

'Instead of just focusing on the higher type yielding property, which usually deliver lower capital growth, you need to consider the capital growth potential as well,' says Kingsley. 'That's because it gives you the option to potentially sell down the property say in 10, 15 or 20 years from the time you bought in and cashing in that capital growth over this period. If you have bought well, you should see a nice lump sum windfall if you do choose to sell.'
 

7. Get help from trusted professionals

See a qualified property investment adviser who is NOT trying to sell property to you, and become as educated as possible before taking a single step.
 

Bottom line

There's no getting around the fact that older investors face a number of challenges when just starting out.

It's harder to find a lender who will partner with you and understand your strategy. It's easier to fall prey to spruikers in the hope that you can fast-track the strategy and you're likely to be more willing to take elevated risk than normal.

'Too often I hear stories of late-comers all of a sudden realising they haven't put away enough for their retirement so they think taking bigger risks to catch up is the way to go, but they could be risking their entire financial future in the process if the strategy they adopt turns sour,' says Kingsley.

This article was first published at www.propertymarketinsider.com.au

Nila Sweeney
Managing Editor of Property Market Insider and a former editor of Your Investment Property Magazine.