How can I build a property portfolio?

To generate passive income you need to build a property portfolio. 

One or two properties is unlikely to get you there. 

How do you build out a portfolio if you are restricted by deposits and borrowing capacity? 

How can you continue buying properties to build out a portfolio? 

Here are my thoughts: 

👉The first step is to find an investment savvy mortgage broker – someone who understands how you can build out a portfolio and can give you a clear road map to do so. 

👉Timing the market is important – get into growth markets so that you can quickly build equity to use for other properties. 

👉Buy properties at lower price point and at higher yields. Take note that even though you are buying at lower price points you are focusing on growth markets. ⬆⬆

👉Avoid buying heavily negatively geared properties that drain serviceability. 

👉Purchase properties that need TLC and add value through cosmetic renovation. In this way you are forcing equity on the property and improving rental income as well. 

👉Look to achieve yields in the range of 7-8% that will stretch your borrowing capacity. Banks will factor 80% of the rental income when calculating your borrowing capacity and higher yields will generally let you borrow more. 

👉Use Non- bank lenders who are more flexible with their lending criteria. 

👉Look to purchase under different entities (trusts etc) to preserve borrowing capacity. Seek advice from an accountant before buying a property under a different entity. 

👉 Understand that over time rents will improve and so will your income. This will help you borrow more as time goes on. 

It takes a lot of effort, perseverance and patience. But the end result is worth it. 

One could do the above on the average Australian income. 

Have you thought about generating passive income through property investing?