The average investor in Australia only owns a single property. Here’s what it takes to get that number higher.
How many properties does the average property investor own? While there will always be property moguls who are constantly expanding their portfolios, the average Australian landlord actually only has a single investment to their portfolio – 1.28 on average, according to CoreLogic.
For the 2 million investors in Australia who own property, this raises an interesting question: Why are so many investors only choosing a single property? And what are their options to expand their property portfolio?
What to look for when buying a second investment property
The old adage of location, location, location will still ring true when you’re expanding to a second or third investment property. However, when you’re growing your portfolio there are other considerations you’ll need to make. You’ll need to decide for example, whether you want to invest in properties in the same area, or hedge your investment by choosing another suburb. You’ll also need to decide whether you want to keep the same style of property or move into something different.
It’s also worth looking at how your current property is performing, to make sure you’re diversifying in the right way. So if your current property is showing low rental returns, but strong capital gains, it might be worth choosing a second investment property that offers the opposite – with a steady income that may not see the same capital gains that your first property has.
What options are there to expand an investment portfolio?
There’s a number of different types of property that you can look to invest in, depending on what your long-term goals are and the sort of yield you want to receive. Just some of the options are:
- Established residential rentals
- Newly built buy-to-rent
- Strata investments
- Purpose-built student accommodation
Each of these will have their own return on investment and their own risks that come with them. That’s why it’s important to find the right option for your needs as you grow your portfolio.
What else do you need to keep in mind?
Like any investment, there are a few key areas that any investor will have to keep in mind as they expand their portfolio.
Perhaps the most important is rental yield. Large parts of Australia are seeing the amount landlords charge to tenants holding at a steady rate or increasing only slightly year-on-year. This is why many landlords are relying on increases in capital gains on the property itself, rather than a strong return from tenants.
You’ll also need to do your homework and make sure you’re getting the right property in the right area – ideally one you know yourself and that you’re familiar with. Just because you’re expanding your portfolio, doesn’t mean you want to be taking undue risks or investing beyond your comfort zone.
If you are interested in expanding your portfolio, please feel free to have a conversation with one of our experienced and professional Investment Property Managers.