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How To Build A Million-Dollar Property Portfolio From Scratch?

Property Investment Accelerator Review

Wondering how investing in property can help you develop financial wealth?

Investing in property is a great way to generate passive income and achieve financial success. But these days, investing in one or two properties may be enough to earn you some extra cash, but won’t always guarantee total financial freedom.

But that doesn’t mean investing in property isn’t the answer.

To get to a level in property investing that’ll allow you to retire comfortably or even exit that 9-5 lifestyle completely, you’ll want to start building a property portfolio.

While it’s no easy task (the majority of Australian property investors never get past the first or second property), there’s no reason you can’t build a multi-million dollar property investment portfolio. Through the right training, education, and guidance, you’ll be achieving the lifestyle you’ve always wanted, unburdened by financial obligations.

What is a property portfolio and what are the benefits?

A property portfolio refers to a collection of property investments that can be either owned by an individual, a group or a company. It’s typical for a property investor to live in one property, while renting out the others. 

We’ve already mentioned that a property portfolio is a great way to achieve financial freedom, but exactly how does it do that? Here are four benefits to building a property portfolio.

  • Multiple Rental incomes

It’s hard to achieve financial freedom by receiving rental income from just one property. Owning multiple properties means maximising your positive cash flow. All the income you make from your properties is a great way to set you up financially.

However, much of this rental income will be going towards paying back any loans, as well as any expenses you might accrue through owning the properties (i.e, management fees, maintenance, repairs, etc.) You might not even see the benefits of multiple rental incomes until some of the properties are completely mortgage free.

Then, you can use that positive cash flow to pay off other properties, building a property portfolio that is eventually mortgage-free. 

  • Access to more Equity

While positive cash flow is great, it’s not the fastest way to generate wealth. But owning more properties means you have access to more equity. Equity refers to the amount your home is currently worth, minus how much you owe on your mortgage.

If your property grows in value, you can access that growth by borrowing against any usable equity. This is a great way to free up your finances, pay off  loans on other properties, and give you access to the lifestyle you’re chasing!

  • Multiple streams of income

Owning multiple properties means that if you have a vacancy in one property, this won’t necessarily have a major impact on your cash flow as there is still money coming in from other properties. 

  • Diversification

Similarly, a major benefit of owning a property portfolio is the ability to diversify your investments. This can accelerate your portfolio growth at a faster rate.

To do this, you’ll need to diversify your properties across a variety of high-growth locations, rather than buying them all in your backyard. Investing in multiple areas and buying different types of property means that if one area or property doesn’t do so well, there is still the potential for growth in other investments. 

Diversification can ensure you are better protected against risk, giving you the best chance of succeeding in property investment.

So, now that we’ve established what a property portfolio is, as well as the benefits, what are some ways to build that massive investment property portfolio?

How to build an investment property portfolio?

Invest in education. The first and perhaps the most important step in achieving a property portfolio is to learn just about everything you can. Investing in a proper education is invaluable, ensuring you make independent but informed decisions.

Of course, developing this education may take time – time you don’t necessarily have. But this isn’t always the case. A property investment course can fast track your learning experience, ensuring you learn from experienced investors and draw from their knowledge, failures, and successes.

For insight into a course that can fast-track this education stage, check out the Property Investment Accelerator Review.

Buy established properties. Don’t buy new properties. New properties have a premium due to the value of the new building itself. Remember, it’s the land which appreciates, while the building depreciates as it ages. It’s better to buy older properties that have renovation potential, increasing their value and forcing capital growth.

Buy outside your own backyard. There are 15,000 suburbs in Australia. It’s highly unlikely that you’ll be able to build a successful portfolio entirely within the suburbs that surround your own. Venture beyond your own backyard, invest interstate and diversify your property locations.

Don’t quit that 9-5 just yet. Achieving financial freedom and retiring early isn’t going to happen straight away. Keep that stable job and source of income to prove serviceability to banks so that you can borrow more money to buy multiple homes.

Eventually, your properties should supplement the income you acquire from your job, but this isn’t guaranteed in the early years of property investing.

Buy and hold. Sometimes a basic strategy can be the best, especially when starting out in building your property portfolio. You can’t build a portfolio by selling your properties fast. Instead, adopt a buy and hold strategy early in the journey.

Don’t try and make a quick profit by flipping the properties. Rather, hold onto these homes to achieve capital growth, and as you progress, then you can look at renovation or development strategies. 

Buy properties with owner-occupier appeal. Make sure the properties you invest in are appealing to owner-occupiers. It is these buyers that make up the majority of the market. Buy property from the perspective of an owner-occupier.

This means looking at the suburb, neighbourhood, and general liveability (of course, there are a range of data factors that need to be considered). In the long-term, properties which appeal to owner-occupiers will outperform investor stock. 

COVID-19 has changed the ways people buy property as well. No longer is a home just a home — it can be a work space, entertainment area, or gym. That bit of extra space can be all the difference for owner-occupiers looking to spend that much more time at home.

So there you have it, a few tips and tricks to build a massive property portfolio. With a little patience and hard work, owning a range of properties is a great way to achieve financial freedom, which means you can dedicate more time to the parts of life you value most. 

PK Gupta
Published: 29 Aug 2022


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