Property Portfolio

Published 26 May 2022Updated 25th January 2023

Property Portfolio

What is a Property Portfolio?

A property portfolio is the collection of rental properties owned by an investor. It’s similar to other kinds of investment portfolios, such as a share portfolio. However, the assets you own aren’t stocks in companies, they’re investment properties that are rented out to tenants.

As an investor, there are typically two ways to earn money from investment properties:

Charging more in rent than you have to pay in expenses: this approach allows you to earn consistent returns and a stable source of passive income, also known as a positive gearing strategy.
Holding a property for long enough that it increases in value: this approach is known as negative gearing and means you’ll likely earn a net loss from your rental income (but may score a capital gain when it comes time to sell).

With a balanced property portfolio, investors (like you) are able to diversify their investments across a range of property types, locations and investment strategies and lower their risk. The strong performance of certain properties can help to offset any losses you make from another rental property in your portfolio.

Plus, a property portfolio can help you build wealth more quickly than just owning a single investment property.

FAQs about Property Portfolios

How do I build a property portfolio?

As an investor, you’re looking to drive strong returns from your property portfolio. The key to generating stable rental income is to ensure your property portfolio is balanced to lower your exposure to risk and boost your chance of higher returns.

When building your investment portfolio, make sure to add a mix of properties across a range of property types and locations. This will ensure you’re offsetting any potential risks and not leaving yourself vulnerable to downturns in specific areas or property types.

In practical terms, here are three key steps to building a property portfolio:

Create a mix of high rental yield and high capital growth properties: properties that generate a steady stream of passive income can help you cover the costs of maintenance, repairs and unexpected periods of vacancy. Plus, having a few properties with stronger long-term growth potential in your portfolio can help you make a capital gain to finance your next property purchase.
Invest in different property types: historically, standalone houses have shown some of the strongest capital growth while units are expected to deliver better rental returns. Adding a mix of both into your portfolio gives you the best of both worlds.
Spread out your portfolio across a range of locations: property values and rental prices can fluctuate over time in different locations. Recently, the regional property boom has seen properties skyrocket in value, while capital cities have seen a dip in inner-city rental prices (particularly for units). Safeguard your rental income and returns by diversifying your portfolio across a range of inner-city, regional and rural locations.

How do I start a property portfolio with little or no money?

One of the biggest barriers to investing in real estate is often the big initial investment needed to secure a property. However, saving up thousands of dollars for a deposit isn’t your only option and there are plenty of ways to build a rental property portfolio on a lower income, including:

Refinance your existing property to access equity: if you’ve already got a home or investment property under your belt, you may be able to access some of the equity in your current property to lower the upfront costs of securing your next property.
Consider a joint application: if you’re building a property portfolio with your partner, you can take out a joint loan. That means you’re both equally responsible for servicing the loan, but you may be able to increase your loan amount and even your chance of securing approval.
Consider a fractional property investment approach: as a pooled investment strategy, this approach allows you to buy shares in a single property with other investors, making it a low-cost way to start investing in property.

How do I grow a property portfolio quickly?

The quicker you grow your property portfolio, the faster you can generate profits and create wealth by investing in properties.

Some practical ways to grow your portfolio sooner and boost your positive cash flow include:

Look for affordable properties in high growth areas: the lower the purchase price of a property, the less you’ll have to pay in mortgage repayments. This increases your chances of following a positive gearing strategy and potentially making a capital gain when you sell (if you’ve purchased in a high growth suburb).
Follow a positive gearing strategy: this investment strategy allows you to earn positive rental income to cover the costs of your current investment property, making it easier to finance your second, third and even fourth investment properties as you build your portfolio.
Focus on building equity in your current properties: choosing a principal-and-interest loan, increasing your mortgage repayment frequency and conducting value-adding renovations are all ways to boost the value of your current property. This will help you boost the equity in this property and help to speed up your next property purchase.

Disclaimer: The information provided on this blog is for general informational purposes only. All information is provided in good faith; however, we do not account for specific situations, facts or circumstances. As such, we make no representation or warranty of any kind whatsoever, express or implied, regarding the accuracy, adequacy, validity, reliability, availability or completeness of any information presented.

This blog may also contain links to other sites or content belonging to or originating from third parties. We do not investigate or monitor such external links for accuracy, adequacy, validity, reliability, availability or completeness, and therefore, we shall not be liable and/or held responsible for any information contained therein.

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Property Portfolio

What is a Property Portfolio?

FAQs about Property Portfolios

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