Property Portfolio Puzzles – Unravelling the Mystery of How Investors Amass 10+ Properties (Ep. 235)

Previously known as “The Property Planner, Buyer and Professor”
 

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Episode Highlights

1.07 – Cate kicks off the episode

3.50 – Dave shares his thoughts on how some of these young multi-property portfolio investors have managed to do it

5.55 – Cate distils some interesting ATO data out of Dave

8.38 – “Let’s talk about the psyche of someone who wants ten-plus properties”

19.12 – Teaser from next week’s episode… The November Market Update

25.00 – Mike challenges Dave to share what sorts of alternative finance could be available for our listener duo

31.45 – What is the one key ingredient that could enable an investor to attain a great portfolio?

35.17 – And our gold nuggets!

Show notes

Listener question from Zak

Hi guys – love the podcast – as a way of background my partner Laura and I worked with Cate on purchasing an IP (and possibly future PPOR) in Ballarat late last 2022 and we couldn’t be happier. 
 
We have 2 properties, both with high 80% LVRs one is old-style apartment in a block of 6 in inner Melbourne that is our current PPOR, the second is the abovementioned IP in Ballarat. Our immediate plan is to fill up our offset due as with high interest rates any return here will be similar to what we would expect with shares. We considered looking for a 3rd property but at this stage our lending capacity is at it’s limit. We are both young professionals with reasonable incomes in a stable profession (healthcare), no children, and no bad debt (personal loans etc).  
 
This brings me to my question – we often see a variety of spruikers discussing their ‘huge’ portfolio – with a particular focus on the number of properties, more than their value. How is it that these individuals (often in their mid to early 30s) are able to amass such large portfolios (10+ properties) without being limited by borrowing capacity? Even if we assume they are cheaper properties in regional centres the math still doesn’t seem to add up. 
 
Is it a case of complex ownership structures? Or have they just had a combination of excellent capital growth, high yields and quite low-value properties? 
 
We look at our situation as 2x full-time professionals being capped out (for now) with 2x properties and struggle to reconcile this with those who have 10+ properties. How do they do it?! 

Can it really be done, or is it a mirage? The Trio enjoy unpacking this one.

Dave starts with some possible explanations for how these young multi-property portfolio investors manage it, and he also shares some interesting data direct from the ATO about the percentage of multi-property investors. Scarce indeed!

“Let’s talk about the psyche of someone who wants ten-plus properties”. Cate sheds light on what drove her to pursue a quick succession of investment property purchases when she was younger. Mike leads the conversation around ego-metrics too.

The Trio challenge some of the mirages out there that investors claim as ‘investments’, and Cate talks about the headache factor of a large portfolio, particularly when she considers upkeep on interstate holdings.

Mike challenges Dave to share some of the alternative financing sources that our listener duo could consider to break past their borrowing capacity constraint. Dave delves into cashflow and buffers, and he talks about risk and where it is relevant when it comes to multi-property investors.

Dave and Cate agree on one key ingredient that can certainly optimise an investor’s chances of attaining a multi-property portfolio… and it’s time.

Gold Nuggets

Mike Mortlock’s gold nugget: Forget the white noise! Just stick to the simple stuff. There’s no tricks. Set a plan based on what you want your retirement to look like.

Dave Johnston’s gold nugget: Work out how much passive income you need for retirement (in rent), work out the total property value you are aiming to purchase, and consider the number of properties that this represents. Shut out the superfluous noise and don’t worry about what others are investing in.

Cate Bakos’s gold nugget: Time is your best ingredient, so don’t sit around waiting to jump into property. When you can, you should.

 

 

 

 

 

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