10 Properties in 10 Years May Not Be the Wisest Afterall

A plan that many people have is to buy 10 properties in 10 years. It’s an impressive boast around a dinner table, and a promise that many a property advisor has advertised. Sounds like the pathway to success, right? 

But many people with this plan don’t actually have a firm goal in mind. Why are they buying 10 properties? Is it to achieve financial freedom? What does financial freedom even mean to them?

It’s always better to get crystal clear on your goals before setting a strategy. Here’s some reasons why 10 properties might not be the way to go:

Do you really want to deal with 10 or more tenants?

Getting rental income from 10 properties sounds great in theory. But sometimes it only takes a hot water system replacement or an air conditioner issue to wipe out your cash flow for the entire year. Repairs, emergencies, accidents, natural disasters all have the potential to cost you big bucks. The more properties you own, the higher the cost of upkeep. 

That’s not to mention difficult tenants or the potential for a property to sit vacant between tenants.

Rental income isn’t as always straightforward as it sounds, and while 10 properties is absolutely do-able it’s important you go into it with realistic expectations.

Lending policy changes – there’s a cap to borrowing

It might be easy to say you want to buy 10 properties, but it’s a lot harder to get a bank on board with your plan. You can no longer hold as much debt as was possible in the past.

In October 2021, APRA announced that new borrowers would have to prove to the bank that they could make mortgage repayments if home loan interest rates rise. Currently, the minimum interest rate is 2.5% and banks are now required to test if new borrowers could afford repayments if the interest rate rose to 5%.

This reduces a household’s maximum borrowing capacity and the amount of debt that can be held. Rather than just sticking to the old adage of ‘buy 10 homes in 10 years’, it’s important to be adaptable to any new policy changes and focus on the best strategy for your specific goals.

Let’s get clear on our goals

If you’ve got grand plans and lofty dreams – amazing. But don’t forget, first things first. What is your aim? What does financial freedom mean for you? What is your dream life and what figure do you need to achieve it?

Your property acquisition strategy must be guided by these goals, not around the other way.

Who knows, maybe 10 properties in 10 years is actually the best way for you to go. But if you free yourself from thinking of investment in terms of ‘X properties in X years’ you may just find a strategy that allows you to achieve your outcomes far quicker.

For expert help and guidance in finding the perfect strategy for you, book a discovery session now.