Can Having a Rental Property Fund Your Retirement?



Will having a single rental property fund your retirement? Or will you need multiple rentals? Is it worth releasing the equity on your family home to purchase a rental, whose income you can rely upon during retirement? Or should you stick to putting your cash into KiwiSaver or another retirement fund?

We’re not financial advisors, so before you make any decisions about using a rental to fund your retirement, talk with an advisor first! As property managers, we do know the Auckland rental market well. We can though, share with you our observations and experiences to give you food for thought, as many of our clients are retired and property investors.

In today’s world, retirement with the pension as your only income isn’t an option for many. There’s the risk that future governments will increase the retirement age, income test the pension or remove it altogether. This makes having an alternative source of retirement income not just nice to have, but a necessity. 

Let’s explore further the idea of having a rental property fund your retirement.

Will a Rental Property Fund Your Retirement?

We’ll be straight up in saying that we don’t know. There’s a chance it could, and there’s a chance it may not. We can share our observations and experiences with you, but you should see the advice of a professional financial advisor before making any decisions.

As Auckland rental property managers, we’ve found that rental properties with specific characteristics bring their owners a higher return than others. If your wanting a regular income from your rental for retirement, look for a property which:

  • You can pay cash for – ideally it’s best not to have a mortgage on your rental, with all of it’s income after costs coming directly to you. 
  • Has a mortgage at a level low enough that you still receive a regular income after costs 
  • Is located in an area popular with tenants
  • Has the potential to rise in value, allowing you to release equity if you sell it
  • Is managed by a professional property manager, letting you actually enjoy your retirement!
  • Has a 100% occupancy rate
  • Contains the features tenants want, such as newly renovated, low maintenance, easy access to public transport and an outdoor entertainment area

In short, if the rent for your property covers expenses with some left to spare, you will receive an income for owning it. This amount will vary depending on their property itself. 

If you’re going to or have purchased a rental property in Auckland to fund your retirement, give us a call. We’re more than happy to explain what being a landlord involves and how we can make life simple for you by managing your rental on your behalf.

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