How to Build a Property Portfolio when You're Young

How to Build a Property Portfolio while You're Young

According to RPData 72 per cent of investors own only one property, while 18.9 per cent own at least two. That leaves about 0.9 per cent of investors with six or more investment properties. Though there are many reasons why the majority of investors own no more than two properties, the sad fact is that you will never become financially independent by owning just two properties.

So what sets the 0.9 per cent minority of investors apart? It's simply that these investors have learnt how to build up their property portfolio at different stages in life.

Let’s look at the early stages in life.

Singles Stage

If you're aged between 18-30 years old and still single, you can tolerate more risks and you have more time to build your portfolio than those that are closer to retirement age.

Make the most of this stage in life by preparing your mindset for the journey ahead. Read and learn as much as you can, attend property investing seminars and start looking for a good team that can provide advice and support along your investment journey.

One of the biggest stumbling blocks for most singles is to save up enough money for a deposit. To help you to save up for a deposit, consider creating a savings plan and make a few life changes so that you can live within your means. Living at home with mum and dad, while you invest will help you to save on rent money. You should also consider using public transport, making your own lunch instead of eating out and cutting/limiting the use of credit so as to avoid unnecessary bad debts.

If you want to build a solid portfolio, you will need to buy properties with strong capital growth prospect so that you can create equity and continue to further buy more properties.

Couples Stage

Many singles form serious relationships and plan to have a family once they reach the age of 25 years, if not younger. At this stage in life, the obvious advantage for many young couples is their combined income and borrowing capacity.

If you've already built a portfolio, now is a good time to consider adding value to your existing properties through renovations, sub-divisions and property development projects. The best time to start these projects is when you have lots of time and energy, when you have two incomes and great serviceability - not when you have a single income, children and other family commitments.

Although a couples (with no children) combined income means that you can afford to borrow more, it's also important to keep your LVR (Loan-to-Value-Ratio) below 80 per cent if you're planning on marrying and starting a family.

Setting investing goals that is realistic and attune to where you are in life is important, but it doesn't end there. Property changes on a constant basis, and there are many laws and tax implications to keep up with. You will need to keep yourself educated by reading books, attending seminars and refining your strategy. You will also need a support team of mortgage brokers, solicitors and accountants to back you up - qualified professionals who are as passionate about property investing as they are about helping you to build up your property portfolio.

Why not make an appointment with an AMO Mortgage Broker to discuss your life stage and financial situation. We can show you how to refinance your home loan or access equity in your home that can be leveraged to buy an investment property.