As a mortgage broker, I feel that it is my responsibility to keep up on developments in both banking and real estate, not only in my home area of Rockingham, Baldivis and Kwinana but across Australia. Recently, I came upon a piece in Your Investment Property Magazine about how to amass a debt-free property portfolio worth $1.5 million in six years.

While the piece is long and involves coaching an investor who already has a net worth of $3 million and wants to retire with a passive income of $100,000 per year and extra money to spend on his “hobby” of renovating homes that sell for $500,000, we found some very useful information that even neophyte investors can use. Here are some great principles that many investors have used to amass huge portfolios.

Risk as Little of Your Money as Possible

It is difficult to start investing without putting in any money but one can get a down payment for an investment property by refinancing a home that has sufficient equity to fund entry into the investment property market. Superannuation funds are often a good source for your down payment, too.

Negotiate a Good Price

While this can be difficult in a “seller’s market” such as the current one, record low interest rates are compensating for higher housing prices. The goal is to have low monthly payments so that you can have positive gearing on your investment properties. The one situation, however, in which buyers still have leverage is distressed properties in need of renovation. Which brings us to the next phase:

Add Value through Renovation

Renovating properties is one of the best ways to maximise profit if done correctly. It’s a lot easier to “buy low and sell high” if you are adding value to the property after you buy it. When you buy a completed home, the builder profits from the labour. When you renovate an established home, you profit from the labour.

Capital Growth

Always buy in areas primed for long-term capital growth. For example, our home area of Rockingham, Baldivis and Kwinana is a perfect blend of affordable homes with tremendous opportunities for capital growth, especially in the long term.

Call 0400 204 408 for more information and if you’re interested in getting a home loan.