Why 4 is a property investor’s magic number

The ‘4 investment properties in 6 years’ strategy to success

As any successful property investor will tell you, no matter what your income level, to achieve real long-term wealth – the type of wealth that sees you retiring early or living a retirement lifestyle way beyond your expectations, you need a strategy to build a portfolio of at least 4+ properties.

Strength in numbers

To succeed as an investor, it’s important to approach the process with a sound strategy and a ‘numbers’ mindset that works towards achieving your end goal.

Let’s say your goal is to earn around $90,000 pa on your properties (as of February 2022, the ABS reports the average income in Australia is $90,896).

Assuming a 5% rental yield at 2.5% inflation, to achieve this you will need a future net portfolio value of $2,605,778*.

This may seem unachievable, but by buying 4 properties over a 6 year period and holding them for approx 15 years to double in value, you can achieve this. If you are prepared to hold for 20 years then you can target even more affordable properties.

Here’s how many of our customers have used this strategic formula to achieve just that. As you can see, between 15-20 years, you would achieve the goal of $2.6m in equity.

This graph assumes an interest-only loan of 100% of the purchase price of the property. If your loan structure contains a P & I component, then you are paying back the principal and your equity will increase more over the years.

4 steps to 4 properties:

  1. Accumulate multiple affordable properties with wider rental appeal to reduce vacancy rates and achieve strong yields
  2. Build a rent-resilient portfolio with a mix of property types
  3. Take advantage of evolving market cycles and stay under state land tax thresholds by buying in different cities
  4. Reap the rewards of a long-term mindset by holding your properties for at least 15 years

*The portfolio requirement scenario is hypothetical and uses several assumptions. The “Future Portfolio Value Required” calculation assumes a 5% gross return, 2.5% inflation and does not take into account holding costs or tax liabilities (which will vary according to individual circumstances).

Please note, the information in this blog, including portfolio scenarios illustrate general concepts only. Ironfish accepts no responsibility for information accuracy. Investors are encouraged to seek independent guidance regarding which investments are appropriate for their situation.

More articles

Want to stay ahead of the rest?

Subscribe to our monthly newsletter: all the major property news, research, insights, strategies and investor stories in our monthly newsletter.

Contact us
Employment Enquiry
.docx,.rtf,.doc,.pdf fiel extensions are only allowed.
.docx,.rtf,.doc,.pdf fiel extensions are only allowed.