How To Own 100 Properties – The 10 Steps To Building A Sizeable Property Portfolio
I want to show you the basics of how to buy 100 properties. Obviously, this is an amazing amount of properties, and will make you significantly rich if you invest properly, so I wanted to cover how to get this many. This is going to be an overview; obviously, I can’t cover everything in a short blog post
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1. Start With Just 1 Property
Getting that first on under your belt is definitely the hardest one to do. You need to save your deposit, and you need to purchase your first property. Start small and learn from your experiences.
Don’t purchase a multi‑million dollar property as your first property. If something goes wrong, you’re going to end up going bankrupt.
Purchase something small that you can handle, that if some minor thing goes wrong you’re not going to go bankrupt. Start small and learn from your experiences. As you get more experience you can move up to more advanced deals.
2. Have A Strategy For Success
You need to know what strategy you are going to use. In order to buy a hundred properties, you need to have a strategy where your portfolio is consistently increasing in value.
Once you get past just a few properties, you’re going to be leveraging those properties and the growth in them to buy more. Things like subdivision, development, renovation or investing in capital growth areas can all be investment strategies that have growth potential.
Choose your strategy wisely. Choose one that suits you well. You can make money from all of them, but you have to be smart about it, you have to be passionate, and you have to know what you’re doing. Choose the right strategy for success and choose the strategy that suits you well.
3. Now Onto Property #2 and #3
Once you’ve purchased the first property, now it’s time to purchase more. Around 90 percent of investors never buy more than one investment property. They go out, they start, they buy an investment property, but then they never go further than that. I don’t know about you, but one investment property might earn you a bit of extra money, but it’s very unlikely to make you financially free.
Save your deposit or leverage your equity to buy property number two and three. There’s the similar process to buying property number one. Stay small, keep learning, keep going, keep growing and try not to buy anything that is going to send you bankrupt if something small goes wrong with it.
4. Going From 3-100 Properties Requires Something A Little Extra
Growing from 3 to 100 properties requires something a little bit extra. Once you hit property number 3 or maybe property number 4 or 5 or 10, at some point you’re going to hit a wall where you’re going to be running out of serviceability. That’s the ability to service a bank loan based on your income.
Because you’re going to have so many bank loans with all of these properties you’re buying, your income won’t be big enough to support all of those loans. When that happens, you’ll need to start treating your portfolio like a business. Focus on cash flow, and focus on growth, and really maximize the return on your portfolio.
You want the properties to continue to grow so you can leverage and buy more, and you want to have a strong cash flow base that you can use so you can continue to service the loans, you can continue to buy more properties, you can continue to borrow more money.
Because if you don’t have that cash flow coming in and you’re negatively geared, how are you going to afford to be negatively geared on 100 properties? The more rental cash you have coming in, the more serviceability you will have.
5. Build Your Team
If you want to go to 100 properties, then you’re going to need a team of professionals around you, a team of trusted advisors that will help you build and manage your portfolio.
Things like accountants, they can be really good doing your tax return. I know I wouldn’t want to do a tax return on 100 properties. Legal advisors if you ever need legal aid, as well as solicitors in purchasing a property.
Real estate agents can be great people to have on your team, as well. They can let you know the good properties before they even come onto the market, which can be a really good resource to have if you want to buy multiple properties, and you need ones where the person might need to sell quick and you want a discount.
Also look at mortgage brokers because you’re going to need to get a lot of bank loans, so having that advice from a trusted mortgage broker can be very, very helpful.
6. Have A Mentor
Have a mentor, someone who’s done it before, someone who is where you want to be in terms of investment.
You are not trying to accomplish a simple thing here, owning 100 properties is a mean feat and the best way to learn is from other people’s mistakes not your own. So get yourself a mentor.
7. Don’t Rush
Don’t rush. This is a very important tip. Obviously, we’d all love to have 100 properties overnight that are generating us millions of dollars. You can build a portfolio of 100 properties very quickly, but it’s not without risk.
You’ve got to think about things like what happens if interest rate goes up? How will that affect your cash flow when you’re now paying one percent or two percent more on all of your mortgages? When you’re highly leveraged that can be risky.
What happens if you have a couple of vacancies? If you have a couple of vacancies and no cash coming in, will that affect you? What happens if an area declines in value and the properties aren’t going up in value or going backwards? How’s that going to affect you? Don’t rush. Think about these things and the risks.
8. Continue To Build
Make sure you’re constantly maximizing the return of your portfolio because if you’re maximizing your return on all of your properties, then you’re going to get ahead faster. Raise rents in line with the market.
I know in the building my mum used to live in, there was a little old lady who was paying about $180 per week for a property that was worth about maybe $350 to $360 per week. This discount in rent is the equivalent to having a 50% vacancy rate throughout the year at market rates!!!
She’d been there for 10 years or something like that, but if she was to move out then she would have to pay those rents or higher elsewhere. Those people were missing out on a great deal of income coming in because they had chosen not to raise the rents in line with market.
9. Get Your Properties Revalued On A Consistent Basis
Get your property revalued on a regular basis if the area and the property have gone up in value. If the property has gone up in value, get it revalued with the banks. You can then use that increased value and the equity that you have in that to purchase more.
10. Structure Your Investment Loans Effectively
Structure your loans effectively if you want to continue to build. There are some loans that you may cross‑collateralize properties, but that may not be the most effective strategy for you. Say one property goes up in value and one property goes down and they’re together on a loan, then your equity is still the same.
But if you have two separate loans, then the one that goes down probably won’t affect you and the one that goes up you can draw on that equity. Talk to your mortgage broker or accountant or bank about that.
This has been How to Buy 100 Properties. To get more information, why don’t you try our free crash course in investing and positive cash flow property. Just go to our home page and sign up today.