January 19, 2025 by Lisa Elliott
More Australians are building wealth through property investment, with 2.2 million Australians owning at least one investment property. So how do they make it work? Let’s break down some key steps to start building a profitable property portfolio.
Step 1: Set Your Investment Goals
When investing in property, most investors aim for two types of returns: rental yield and capital growth. Rental yield provides regular income from rent, while capital growth comes from the increase in property value over time.
- Rental Yield: Great for those looking for steady income, especially in areas with high demand for rentals. Rental yield is calculated by dividing the annual rent by the market value of the property
- Capital Growth: Best for investors who can hold a property long-term and watch its value increase, often tapping into that equity to buy additional properties.
Knowing which return you prioritize helps shape your investment strategy and decision-making.
Step 2: Establish Your Budget
Understanding your budget, borrowing capacity, and income needs is essential. Lisa Elliott can help determine your borrowing capacity, factoring in potential rental income as part of the equation. This way, you’ll know exactly what you can afford upfront, making it easier to narrow down options and secure pre-approval.
Step 3: Research High-Growth Areas
Finding a property in a high-growth area can improve your investment returns. Locations with rising property values, robust rental demand, and expanding infrastructure are often the best bets for growth. Request a property report from us or use available resources to identify trends in areas you’re considering. Some investors seek the expertise of reputable Buyers Agents.
Step 4: Identify Your Ideal Tenants
The type of tenants you want can influence the type of property you choose. For example, young professionals may prefer apartments near city centers, while families might lean toward spacious homes near schools and parks. Researching local demographics can help you select a property that appeals to your target tenant, ensuring consistent occupancy and rental income.
Step 5: Plan an Exit Strategy
Even with solid research and planning, some properties might not perform as expected. A well-defined exit strategy is crucial; it outlines how and when you’ll sell if the returns don’t meet your goals. This plan ensures you have an option to liquidate and reinvest if needed.
Getting Started
Starting with a single investment property is an accessible way to enter the property investment market. Reach out today to discuss your investment goals, determine your budget, and start planning for long-term growth.
For some further light reading, download my FREE guide Your guide to becoming a Property Investor
Lisa.Elliott@mortgagechoice.com.au
Ph 0413 848 0639
