Stepping out of the workforce will resonate differently for each individual, and it doesn’t always mean slowing down.

As a property enthusiast that has put in the hard yards over the years, the time has finally come to live off the cash turbine of your property portfolio. But what if your property income isn’t quiet where you want it to be?

And what if you’ve started to scout property investing options on the brink of retirement?

There’s one thing worth remembering – there’s still room to cultivate your wealth.

“I know some conservative financial planners suggest you should go into retirement with no debt at all, but in my mind entering retirement with a conservative amount of leverage works well for those investors who have set themselves up correctly,” shares Brett Warren of Metropole Property Strategists.

“What I’ve found is they live off their superannuation income and assets for the first 10 to 15 years of their retirement years, allowing their property portfolio to once again double in value, and this allows their already low loan to value ratio to fall even further, enabling their property portfolio to spin off even more cash flow.”

How an investor approaches their finances during retirement will ultimately depend on their personal circumstances.

Many investors decide to bring one or two of their properties under the hammer to fast-track lowering their debt levels and bolstering their cash flow, and others might re-invest into commercial property or funds that yield superior returns, Warren explains.

“While there’s no exact formula, the end game I’d like to see is that you own your own home with no debt against it as well as a portfolio of investment grade properties with an LVR of less than 40%, as well as some income producing assets such as shares or managed funds,” Warren shares.

Around five to seven years out from retirement, it’s recommended that an investor meet with a qualified and professional wealth advisor to formulate an exit strategy, Warren says, which includes a plan to reduce debt.

Getting hands on

It’s a nice feeling to assert more control over the amount of growth an investment property will reel in.

For investors who are closer to retirement and have equity to propel them forward, Warren says that a value-adding project “speeds the process up a little bit”.

“Rather than buying off a plan or new, actually buying something where you can grow your asset base faster by undertaking a renovation or a development,” Warren shares.

“They should be looking for something that’s in a high growth location that they can add value to. That way rather than relying on the market to do the heavy lifting, by adding value they can increase the value of the property, they can increase the cash flow of the rent of the property, and it will grow in value considerably faster.”

However, when taking on a sub-division or a development, Wayne Jessup of The Property Bloke says it’s important to get the fundamentals right first.

“It’s like starting a business, if you start out a business and you just want to do the most high-risk thing possible, it’s very dangerous… what I tell people is that you’re at chapter 1, so let’s find a strategy that suits your chapter 1, and you’ll get to chapter 10, chapter 20 as you build your experience,” Jessup says.

Beginner-friendly approaches, such as manufacturing another bedroom or building a granny flat, can really help to increase cash flow into the property.

Creativity can go a long way, Jessup says.

“Small changes in the property can give it more value. For instance, potentially an additional tenant that will just bring the cash flow up to the level where you need it to be for your portfolio.”

Can you retire quicker?

While substantial returns can be bred from a long-term approach to investing – and risks can be mitigated better this way also – Jessup says there are also short-term strategies that can provide quicker returns.

“When I say short term, I mean within 24 months you can make a big difference. Then you can actually get to a retirement age or retirement money within a few years if you are prepared to do the work,” Jessup shares.

“What we set up is what we [call] a foundation first, and a foundation is choose two properties and normally with those two properties you have one capital growth and one cash flow, and with four properties you have two capital growth and two cash flow, so they basically pay for themselves and it doesn’t affect your own finances.”

Jessup says that it’s important to make sure that when building your portfolio that you are mixing up the style of properties.

“Some properties are more dedicated to cash flow and other ones might be more dedicated for capital growth, so as your portfolio is getting older and you’re getting older, you really have to focus more on cash flow than capital growth.”

The next stage up from foundation is the elite membership program, where The Property Bloke provides one-on-one coaching for “next-level” strategies; such as small sub-divisions, room sharing and other property options.

Jessup says that this provides the opportunity for “a lot of growth within your portfolio because you are being really active and you have full support”.

While days spent by the beach and the emerald stretch of a golf course might come to mind, Warren of Metropole Property Strategists says that most successful people want to keep working during retirement but in a different capacity.

“They just want to keep doing things. They want to slow down but they only want to do things at their own pace; they may choose to work a couple of days a week, they may have a passion project where they may give back to the community or something [similar], but they have this passive income coming in [from their properties] that allows them to do those kind of things and they don’t need to work full time,” Warren shares.

Investors possess a level of courage and bravery, he adds.

“It does take a lot of getting outside of your comfort zone, but the only way you can get to where you need to be is to get advice from professionals and do that,” Warren says.