5 Keys To Building Sustainable Property Portfolio

1st: Knowing your numbers is the key

How can you achieve your goal through property investment If you don’t fully understand them such as: how much passive income do you need for your retirement plan, how is your property performed was, what’s the ROI and rental yield for each property, what is the LVR and interest rate for each property, how much positive cash does your property generate each year, or are they heavily negative geared? I will share bit more on how to analyse these numbers in my future article.

2nd: Review your finance

Once you clearly know your numbers, you need to make the best out of it. Talk to your property strategist and the experienced mortgage broker who specialises in investment loans at least once a year. Get your property valued annually to see if there is any value increase and any better loan package on the market, ask your broker if you should fix the loan or pay P&I etc. If you have a good strategy, all these factors will potentially save you big money each year. However, a poorly structured loan portfolio will reduce your flexibility through cross securitisation, increases your risk profile and can create reporting and tax nightmares as well.

3rd: Cashflow is king

Like any business, cashflow is King. Once you review your property & loan portfolio annually, you need to focus on your cashflow. Securing quality tenants who look after your property with fair market rent for the long term is far more crucial than trying to achieve the higher rent with longer vacancy period causing losses to your everyday cashflow.

4th: Minimise the risk

Insurance is a safety net, which maximally protect your assets. Chose the right insurance which will cover losses or damages caused by unexpected events. I have real stories to share next time on how the insurance saved hundreds, thousands of loss when they are in place.

5th: Think Long – term

I love this quote from Warren Buffett: “Nobody buys a farm based on whether they think it’s going to rain next year, they buy it because they think it’s a good investment over 10 or 20 years.” Buffett decides something is worth investing in because it will last, not because it’s doing well right now. This comes back to having an investment plan in place. If you have a goal of building an investment portfolio or creating passive income of $100,000 in 15 years, put together your plan and start working on it today.

Talk to your mortgage broker, financial adviser, property strategist about your investment plan, understand how different investment properties could affect your borrowing capacity and ultimately hold back your goals of building an investment portfolio.

I hope you have found some valuable tips from this. Feel welcome to contact Midas team if you have any questions.