How Baby Boomer property investors can have a successful retirement

If Baby Boomers are to navigate this threats successfully, said Doron Peleg, CEO of RiskWise, they need to have a grasp on doing sufficient research and knowing how to buy right.

“The objective is to buy and hold, but you also need to know where to buy and which market you are targeting — primary (which is eligible for tax concessions) or secondary (not eligible for tax concessions),” Mr Peleg said.

“Investors need to understand that if they try to sell these properties they will be in the secondary markets so, if the reforms do take place, they won’t be qualified for tax concessions.”

Finding properties with good long-term rental returns and capital growth is important for an investor, which are likely found in the middle rings of capital city areas, Mr Peleg said. These properties are likely to be attractive to families and have undersupply issues; a combination to result in a large possibility of a rise in price, especially in Sydney, Melbourne and south-east Queensland.

By attracting families, investors are more likely to secure a longer-term tenant, especially if the property is located in a school catchment area for children, close access to transport infrastructure, as well as having a parking space.

“If you can attract good tenants, you can also reduce the costs associated with the changes of tenants such as letting fees and other expenses. It also means there is a low vacancy rate,” he said.

“In addition, good tenants mean you don't have to spend as much on maintenance as they are more likely to look after the property.

“Younger renters on a budget are more likely to move around and therefore you have a higher vacancy rate and letting fees.”

During the first couple of years of investing some high-risk areas, Mr Peleg said it is likely prices could go down, but the decline is only temporary.

“It’s true that the first couple of years prices could go down in some areas because they carry a high level of risk due to credit restrictions, a drop in foreign investors, and the reforms to negative gearing and capital gains tax if Labor wins the federal election, but after this, prices will go back up and then you have a property suitable for owner-occupiers,” Mr Peleg said.