Building a high performing portfolio with our “One For One Strategy”
Building a portfolio that performs is all about getting the strategy right and aligning it with your goals. If you want to know how to have a portfolio that you can retire on, then keep reading….
To ensure that our investors have a high performing portfolios that are balanced and diversified, we have developed the ‘one for one’ strategy. In essence, the portfolio is built by securing a combination of strong growth properties and rental or retirement properties.
Many investment firms simply fill their clients portfolios with rental properties, but neglect to get them any strong growth properties. They heavily leverage investors in to regional and/or tourism markets where the markets are soft and have a history of underperformance of capital growth. This is not a good portfolio.
We always recommend that the first property in your portfolio be a stronger growth one, so as to anchor your portfolio. You can then leverage the growth of that property to use as a deposit for the next property, which then creates the leap-frogging effect from one property to the next. Otherwise, if your first investment is not a growth property you will have to save another deposit for the next property. If we do our job right, or you set up your stagey right then you should never have to save another deposit again. Your portfolio should work for you, not you working for it.
Many investors who go it alone, tend to buy two or three rental style properties and then don’t manage to get enough growth across the portfolio to continue to buy properties without having to keep saving deposits, let alone to achieve their goals. This type of portfolio will not exponentially change your life. You will just be collecting properties for the sake of collecting properties. This also creates tax problems.
The other thing to consider is that once you get one or two growth properties, you will start to hemorrhage money in holding costs if you don’t have a decent deposit. The first option is to be a good saver and have the desire to save a 20% deposit for each purchase too keep your borrowing costs down. Not many people fall into this basket. A better option is to balance the portfolio with a growth property, then a stronger rental property, growth, then rent. This will ensure that you get the growth you need but also keep your cash flow manageable as you build your property portfolio.