Sometimes during our working life we start to look at other options to give us more choices in life – one of those being property investing.

Go to school, get good grades, go to uni, get a good job, buy your family home and retire comfortably… THAT was the old formula that many of would have heard growing up. It certainly has its merits and has provided a lot of people with stability over the years and possibly something to pass onto the next generation.

However, there comes a realisation for many of us when we are in the workforce working 10,12 or 14 hours work days that we ask ourselves, “what are we actually doing this for?”  Often at this point we start to look at other options to give us more choices in life – one of those being property investing.

When it comes to property investing, it seems to be a hot topic at every family BBQ or event, probably because we all feel a connection to property whether we are renting or paying off a mortgage.

But is there a right and wrong way to invest in property?

The short answer is yes and no! But the long answer is, depending on your individual situation and what you are looking to achieve in the timeframe that you have, will determine the strategy for your investment journey. Whilst there are many strategies that can be implemented, there are key principles to any strategy that should be considered:

1.    Accumulation
2.    Consolidation
3.    Loan to Value Reduction


During this phase, the focus should be on accumulating as many growth assets as possible that you can financially support. The aim is to build a “base”, build your foundations, so that it can provide long term growth over your investing journey. Toward the end of this phase, you may find it a lot more difficult to borrow money from the bank as your debt starts to increase.


During the Consolidation phase, the focus should be on reducing the amount of higher growth assets and build the cash flow machine from here. Meaning, that if during the accumulation phase, there was a lot of negative cash flow properties, now is the time to find the more cash flow positive properties.

Loan to Value Reduction

This phase is where all the hard work pays off, where you can start to reduce some debt and have cash flow come in as your source of income. There are several ways to do this and it can be done purely by selling off properties and reducing the debt or you can use the equity you have built within the portfolio to live off, but this also has its risks if the portfolio isn’t growing faster than you need to live your lifestyle.

At the end of the day, each person’s individual investing journey will be different based on a number of things including;

■    Starting points
■    Knowledge
■    Risk profile
■    Incomes

However no matter where you start and where you want to be, there is always a solution to get started and build your portfolio to provide a better life through property.


Image Credit: Axon Property Group




For help with property on Sydney's Upper Northern Beaches.