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Why do we need at least 4 properties to achieve real long-term wealth?

Despite the overwhelming potential that property investment represents, a staggering nine out of ten Australian families have yet to tap into this lucrative opportunity. For those who have already taken that bold leap and joined the mere 8% of Australians owning investment properties, congratulations on embarking on this life-changing journey.

The goal of most property investors is to create a portfolio of real estate that provides them with a consistent and reliable income stream, known as passive income, well into the future.

However, generating substantial passive income and achieving financial freedom often requires more than just one or two investment properties. Once you understand the power of a diversified portfolio, you will realise why 4 is a magic number when it comes to property.

Unlock the Power of Property Portfolio Diversification with 4+ Properties

A diversified portfolio is key for property investors as it allows returns to be optimised across the portfolio and minimises the risk of loss due to external factors. It also provides a more stable income stream over time, as investments can be spread across different types of properties in different locations.

Investing in real estate can yield significant returns, but it’s important to diversify your portfolio to reduce risk and maximise profits. A diversified real estate property portfolio could encompass various locations, property types, and purposes, such as build to rent versus renovation for sale. There are different methods you can use to achieve a diversified portfolio, such as borderless investing and rentvesting. With borderless investing, you can invest in properties across different states and regions, reducing your exposure to any one location or market.

Rentvesting  is a property investment strategy where someone chooses to live (and rent) where they love but buy (invest and rent out) where they can afford. This approach could see rentvestors taking out an investment loan and buying one or more investment properties first before potentially buying their dream home to live in.

The ‘4 investment properties in 6 years’ strategy involves carefully building a diversified property portfolio, to build long-term wealth creation and stability. This is an effective approach for those seeking to attain true financial freedom and live their retirement years in ultimate comfort.

By diversifying your investments, you set yourself up for success by targeting assets with varying degrees of price points, locations and rental yield. For instance, if you are looking for higher rental incomes, target multi-unit properties within capital city CBD’s. Whereas larger family homes in desirable suburbs generally provide higher price appreciation rates as well as strong rental incomes. By building a well-rounded property investment portfolio, you optimise the potential for both steady cash flow and robust capital growth.

‘At Ironfish, we know there are clear, strategic advantages of a diversified property investment portfolio targeting affordable properties of different types, spread across multiple cities. Our Portfolio Approach empowers investors to potentially reach their goals faster. Backed by the confidence of the latest research, with increased buying power interstate and VIP access to quality investment opportunities, we help our investors to buy and hold onto properties more easily long term. Our mission is to help you achieve financial security for your future; we’re in this together and we’re with you for the long term.’

Grant Ryan, Ironfish Property Director

What the numbers tell us

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

Let’s say your goal is to earn approximately $90,000 per year from your investment properties.

As of November 2023, the ABS reports the average income in Australia is $98,000. By approaching property investing with the goal of creating a portfolio of four investment properties within six years, you can realistically reach that level and benefit from the security and freedom that comes with a steady cash flow derived from owning real estate.

Assuming a rental yield of 5% and an average inflation rate of 4%, to achieve an income of $90,000 per year after six years, you would require a total net portfolio value of approximately $2,605,778*.

In other words: A successful property portfolio of four properties in six years means you are well on your way to financial freedom.

Although it may seem like an ambitious target to some, the rewards of building a diversified property portfolio will far outweigh any challenges that may arise along the way.

Investing in four properties over a six-year time frame and then holding them for up to fifteen years can help you get closer to your desired outcome. If you are willing to commit to a twenty-year timeline, then you can target even more properties over this period and achieve greater returns.

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Take the first step towards better results. Book your expert consultation today!

5 steps to acquiring your 4 properties

While the journey to achieving financial freedom can seem unachievable to some, it is possible with the right guidance and strategy. This is how an Ironfish Strategist can assist you:

 1. Help you set clear goals

Having a very clear financial goal and a timeline in which to achieve it is important. This will provide you with motivation and direction throughout the investment journey.

 

  2. Accumulate multiple affordable properties with wider rental appeal to reduce vacancy rates and achieve strong yields

By diversifying your investments you can target assets with varying degrees of appreciation and rental yield. Consider properties in different locations, as well as different property types to maximise returns.

 

 3. Build a rent-resilient portfolio with a mix of property types

Ensuring the right properties are chosen is essential. That way, even if the market is soft you should always have tenants who will pay the rent and be good custodians of your investments.

 4. Take advantage of evolving market cycles and stay under state land tax thresholds by buying in different cities

When you’re looking to invest in property, it’s important to take advantage of the market cycles and stay below state land tax thresholds by investing in different cities.

 5. Reap the rewards of a long-term mindset by holding your properties for at least 15 years

By holding them for at least 15 years, you can take full advantage of the compounding effect of capital growth as well as defer CGT. This will help to maximise your return on investment over time.

When consulting with a team of highly experienced property investment experts like Ironfish,  you will receive the latest property insights to help you create a strong portfolio of investment-grade properties. At Ironfish, we can help you take advantage of evolving market cycles and stay under state land tax thresholds by buying in different capital cities. By following our proven portfolio strategy, you’ll be well on your way to achieving your financial freedom.

Far more than just a numbers game

Successful property investing also means adopting a strategic mindset, which is why partnering with Ironfish has worked for so many of our customers like Patricia and Alex.

At Ironfish we take a holistic approach to property investment, ensuring our customers build the right portfolio for their individual needs. By leveraging the latest in research and strategies, along with ongoing education and personalised support, we help investors create a diversified portfolio of properties.

Achieving financial freedom is possible – it just takes preparation, a sound strategy, and the right partner. To get started and begin your journey to financial freedom, contact Ironfish today.

* Disclaimer: The property investment scenario is hypothetical and uses several assumptions. The ‘Total net portfolio value’ calculation assumes a 5% rental yield, 4% 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 article, includes a property investment scenario illustration which is a general concept only. Ironfish accepts no responsibility for information accuracy. Investors are encouraged to seek independent guidance regarding which investments are appropriate for their situation.

 

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Take the first step towards better results. Book your expert consultation today!

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