Andrew Carnegie famously said 90% of all millionaires grow rich through investing in property investment.
While there isn’t any hard data to back up Carnegie’s claim, you only have to glance at The Australian Rich List to see why property investment is a popular way of building wealth in our country, with 59 property moguls included in the 2022 edition. This just proves how powerful property investment can be when done right.
In fact, according to the Australian Taxation Office’s most recent statistics, over 2.2 million people hold an investment property, which works out to about 20% of all Australian households. This shows that property investment remains a favored strategy for Australians looking to grow their wealth.
But if you dig into the data, you’ll discover something interesting:
- 71% of property investors hold only one investment property
- 4% of investors own four or more properties
- 1% own six or more
These numbers clearly show that while many people enter the property investment game, only a small percentage manage to build a true wealth-generating property portfolio.
Quality is always better than quantity. That said, owning a single investment property is unlikely to generate enough passive income to secure your financial freedom. For that, you need a well-structured property investment portfolio.
So where do most property investors go wrong?
It’s not from lack of trying. Rather, it’s because most investors don’t buy the right property at the right price. And much like building a house, the key to success in property investment is to start with strong foundations.
Building a wealth-generating property portfolio requires careful planning, market knowledge, and a long-term strategy. Choosing high-growth locations, understanding rental demand, and ensuring your finances are in order are all crucial steps to setting up your property investment journey on solid ground.
You need to get things right from the start
Investing in property investment can be a great way to build long-term wealth. But it’s not as simple as buying any old property and hoping for the best — a successful property investment strategy requires research, planning, and smart decision-making.
That’s because not every property makes a good property investment. Whether it’s because the property is in the wrong location, priced too high, or isn’t attractive to quality tenants, these factors can significantly impact the property’s value and future growth potential.
A poor property investment choice can also tie up your cash flow, making it harder for you to leverage your investment. Leverage is one of the most powerful tools in property investment — it’s when you borrow money to buy a property instead of funding the purchase entirely with your own savings.
Through property investment, you can also leverage the equity in one property to buy another. As the value of your investment property increases, the equity you hold grows — and you can use this equity to secure loans for additional properties. This process can be repeated again and again, allowing you to scale your property investment portfolio efficiently.
That’s why the first investment property you buy is arguably the most important. Getting your first property investment right lays the foundation for future growth, helping you build a strong, wealth-generating property portfolio.
How to find a quality investment property
Buying an investment property is very different from buying a home to live in. You need to base your purchasing decision on facts, not emotion. So you need to thoroughly research a wide range of property and data sources to find the best location to invest in. Once you’ve found a good location, you then need to identify quality properties within that location that will deliver you strong long-term capital growth and a solid rental yield.
Whether you’re an existing or prospective property investor, High Income Property can help you buy a positively geared property in a location with long-term growth prospects. To discuss your options, schedule an online meeting or (02) 8007 4001.