Investing in residential property to fund post-retirement income.
Phafuli, Lialuma Dickman Ramsay.
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This research investigated the economic viability of a strategy of individuals' saving for retirement. The strategy is based on acquiring rental property over the working lives of such individuals, and funding post-retirement income from the rentals. The main aim of the study was to determine the role that professional personal financial planners can play in that determination of the economic viability, as well as the management of investment strategy implementation on behalf of their clients. The study thus approached the proposed investment strategy from the point of view of the planner . A financial planner has responsibility in terms of the law, to provide independent advice; this requirement means that such a planner needs to investigate various investment vehicles for clients to reach their objectives. Such investigation requires a thorough due diligence process on the part of the planner. This study applied techniques of traditional finance and market research, to perform such due diligence. The initial research was exploratory; the purpose was to obtain a sense of market conditions in the townhouse market in the target area. The researcher conducted informal interviews with estate agents in the area, and observed local newspapers for asking prices on townhouses as well the rentals they demanded. Two sets of questionnaires were then administered to tenants and rental agents in the area. Participants in the surveys were selected based on purposive sampling. The major finding of the study, is that based its net present value, the strategy is economically viable. The study also found that because investor decision-making is complex, the role of the financial planner is to support such investors within a structured framework, so that the investor's life goals can be achieved. The main recommendation of this study is that, the investment strategy is specialized, thus financial planners should only consider it with access to specialized knowledge of local real estate market conditions.