With Australians living and working for longer, the simple act of retiring isn’t what it used to be. For many, retirement comes in stages, perhaps with a move to part-time hours, or working from home a few days, or settling into consulting before winding up and enjoying the three Gs – gardening, golf and grandkids.
While semi-retirement helps people enjoy the lifestyle and wellbeing benefits of working less, or with more flexibility, many don’t want to reduce their spending to accommodate the reduction in wages. Fortunately, there are a range of investment options that can help people in retirement continue to enjoy the same rate of income. Income-producing properties, such as serviced apartments, offer a great alternative to traditional property investment for those looking to step back from work.
The main benefit of serviced apartments is the reliable rental income. Paid monthly, and free of management fees, this rental income can be used to supplement lost income from salaries, helping those in semi-retirement to maintain their level of comfort and lifestyle as they transition to full retirement.
The long-term leases afforded by serviced apartments offer greater security for those looking to replace wages but maintain cashflow. Serviced apartment leases are usually negotiated for 25 years, with built-in rental increase and 5 yearly market rental reviews. A long-term lease means you don’t have to worry about tenant turnover and loss of income during periods of vacancy, giving you peace of mind and reliable income for the duration of the lease.
What’s more, your lease is with a serviced apartment company, who then lets the room to short-stay visitors, as a hotel room. This means that you earn your rent, whether or not the room is actually occupied, further adding to the financial benefits serviced apartments offer. For those looking to reduce their working hours and rely less on their paid income, long-term security is a huge plus.
Plus, being a serviced apartment regular housekeeping helps reduce wear and tear, and guests help to identify small issues with the property before they become major issues.
While serviced apartments may not be the first option that comes to mind for those considering entering semi-retirement, the many benefits that support the change in lifestyle are well worth considering. Speak with your financial planner or accountant about the options and see whether a serviced apartment investment fits your personal retirement/investment strategy.