Portfolio value vs. Count of properties

If you’re starting your property investment journey or are in the initial stages of establishing a portfolio, this post in the age of the hype around count of properties one owns versus the value of your portfolio would help. We’ve read on various property forums threads about “how many properties do you own?”, “how many properties did it take you to hit $1 million?” In our opinion looking at a portfolio’s success against the number of properties is a fallacy. Initially in our journey, it swayed us considerably too in terms of “number” of properties we had to have. It was inspiring indeed to meet people with 20, 50, 70 and 100 houses!

We met a young investor who happened to have bought 4 properties in 2 months in regional towns and that looked impressive. At the time it felt “WOW”, however, in hindsight, quality matters and not quantity. Further we then met a few people who travelled all across Australia to buy properties in regional areas with little or no prospects for capital growth in 2010-2012 when all of the same was doable in Sydney’s backyard – Western Sydney! If you are building a portfolio, you need to look at purchasing in capital cities with potential for capital growth! So my question to budding investors would be – Why make it fancy? Keep it simple and stupid. Works for us!

Whilst number of property acquisitions can be and are impressive (and trust me it feels great every time another property settles and the solicitor’s office leaves a message to “pick the keys”), we want to bring your attention to quality versus quantity debate. In the initial days, we wanted to increase the property count no matter what. We even put an offer on a property in Townsville to bolster the numbers. This is in early days. The universe was kind and thankfully such deals never happened. We stuck to Sydney and continued buying in the rising market and the rest is history!

For those starting out and wanting to build a solid portfolio, we suggest:

1. Although number of properties would give you a ballpark figure to aim for e.g. 10 x $300k properties, look at having a $3,000,000 portfolio in ‘x’ number of years and then work out how you are going to achieve it. Note: it’s all compounding unless you buy in a flat market (that means you need ways to generate equity)
2. Buy quality assets. What’s the use of 30 x $100k houses that don’t grow at all? And cause a lot of tenant and maintenance headaches
3. Figure out why you’re investing in property altogether? Is it to give yourself/family a better future or is it to say “I own an investment property” even though it may not grow at all?
4. Work out your strategy in terms of what is acceptable with return, location, property type and what isn’t. If you don’t know what you’re looking for then everything looks the same! For instance, we like well located properties. We tend to avoid buying properties that are not serviced well by transport and shops and that means a lot of properties don’t make the cut to begin with!
5. Choose a broker who is willing to work out a proper structure. Refer to #1 – if you want $1m, $2m, $3m, $4m, $5m and so on worth of acquisitions, figure out against your income & expenses if any of this is possible? If not, what are your options? How do you maximise it? The right broker will be willing to spend time with you working out a road map to your goals!

Read up our blog posts with our views on topics such as Off The Plan (Brand New) housing (our favourite topic and the best lesson!), setting and pursuing visions / mindset, Cashflow vs. Capital Growth to name a few.

Here is to a successful property investing journey!

Best,

Property Twins

www.propertytwins.com.au

To Get Started: Schedule A Chat with the Property Twins Team
Join Our Exclusive Facebook Community of 6,000+ Property Investors: Property Addicts Australia
Join our Exclusive Search & Select The Right Property in 90 Days 5-Day challenge

Note: Please ensure you always seek specific specific credit, tax, financial, legal or investment advice. Property Twins' Blogs are not a substitute for personal and specific, taxation, financial, legal or investment advice