How many investment properties do Australian investors really own?

You’ve probably hear me quote that most real estate investors never get past their second property and that’s why I consider they’ve failed in their investment objectives.

You’ll never become financially independent with one or two properties.

These stats were confirmed by Cameron Kusher from RPData where he reported that:

According to the ATO data, 72.8% of individuals that owned an investment property owned just one. Meanwhile, 18.9% of individuals owned 2 properties while just 0.9% of individuals owned 6 or more.

Individual's interest in rental property

There are just over 23 million people in Australia of which 1,811,174 individuals (just under 8% of the population) reported to the ATO as having an investment property

Interestingly 1,213,595 of these individuals, or two out of every three investors, were negatively geared and reported a loss on their rental income.

The bottom line is…

If you listen to who everyone else listens to and if you do what every one else does with regard to property investment, you’ll get the same results as everyone else gets.

That’s why I select those who blog on my Property Update site carefully. They are all successful real estate investors who’ve built their own substantial property portfolios

[post_ender]



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Michael is a director of Metropole Property Strategists who create wealth for their clients through independent, unbiased property advice and advocacy. He's been once agin been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


'How many investment properties do Australian investors really own?' have 20 comments

  1. July 1, 2013 @ 8:09 am Pradeep

    A lot of them don’t hold properties on their personal name, rather hold on trust or company or superannuation or partnership of these entities. So, do you think its correct to only focus on individuals leaving all other properties in Australia that are still invested.

    Reply

    • July 1, 2013 @ 8:33 am Michael Yardney

      You make a good point Pradeep.
      In fact more investors are now buying properties in their SMSF’s and in entities

      Michael

      Reply

  2. July 1, 2013 @ 8:11 am Gerry

    Morning Michael.
    Interesting stats. I am in .9% group; which obviously makes me priveledged. The thing is, if you start young on a small income and then purchase more property as your invome grows, you don’t notice the impact of the negative gearing. Over time, if you don’t redraw – save for significant items for the property (NOT lifestyle as some spruikers suggest) such as renovation, HWS, upgrades – the rent grows proportionately to the loan to the point that after 10 years of ownership, if you borrow 100%, the rent pays the mortgage. And off you go for the next. Starting at 25, you’ll have a minimum of 5 properties at retirement. Spend less on ourself is my motto.
    Gerry.

    Reply

    • July 1, 2013 @ 8:31 am Michael Yardney

      Well done Gerry!
      Yet I bet when you bought your first property real estate seemed expensive, just like it does for those starting out today.
      Michael

      Reply

    • March 18, 2015 @ 5:35 pm Jerry

      Gerry,

      That’s the idea mate.
      I started with my first home, my PPOR, at 22 – I was a student at the time, still at uni, working 2 part-time jobs to make ends meet and managed to save a meagre deposit on an ex-housing-commission area home 40km out of melbourne. It was cheap even for the time and even now – but none of my mates regarded the area as an option because they thought themselves above living there. Once I bought in the area I found it to be very peaceful and not at all like its rough reputation. The value went up (a rising tide lifts all ships.. even less popular areas always increase in price) – and I was able to purchase an investment property off the back of it 3years later. 3 years after that, I bought the 2nd investment property, 5years later another.. 5yrs on from that (16yrs later) and I’ve managed to purchase 2 more properties in just under 12months.
      I’m now in my late 30’s and follow the slowly-but-surely approach.

      What I find irritating now is the first-home-buyers bleating they can’t afford to get in the market, yet there are still multitudes of areas on the outskirts of cities in the affordable price-range, offering good growth prospects and lifestyle that they are turning their noses up at.

      Reply

      • March 18, 2015 @ 5:54 pm Michael Yardney

        Jerry

        You are right – the expectations of first home buyers is very different today than it was in the past

        Reply

  3. July 1, 2013 @ 8:33 am Minh Nguyen

    Hi Mike

    I do not accept your statement that “You will never become financially independent with one or two properties”. I am a property investor with 5 properties but my last property purchase was 10 years ago when I discovered the stock market. It is unlikely that I will buy another property in the future. Among a plethora of issues facing property investors, the one issue that I am most concerned about is capital gain tax. The beauty of owning shares is that you can sell bit by bit to minimise capital gain tax. You can’t do that with property. I am not saying that property investing is not worthwile but people wanting to invest in property should think about the CGT isssue before taking the plunge. It certainly wrong to say that you can not be financially independent with one or two properties. There are other and sometimes easier ways to make money. That is propbably why people stop at one or two properties.

    Minh Nguyen

    Reply

    • July 1, 2013 @ 10:01 am Michael Yardney

      Minh
      Thanks for the comment. I don’t disagree that there are other ways to become financially independent other than properties. Running a successful business is one, and of course a good share portfolio is another.
      What I was saying is ONLY owning one or 2 properties won’t make you financially independent.
      Michael

      Reply

  4. July 1, 2013 @ 2:46 pm Ian

    Good points all round, I think the significant issue is the negative gearing. Buying negatively geared properties is a quick way to have to stop at one or two. When I first started it was ‘advised’ to me that negative gearing was wonderful as we were both PAYE employees but you cannot build a decent portfolio on negative gearing and so I went looking for better advice.

    Reply

  5. July 1, 2013 @ 8:35 pm Phil

    Negative gearing isn’t a strategy, but more a result of you circumstances, great to have yield and growth. I have 4 properties, not quite 30 yet and once I reach around 10 I will turn to commercial property, then shares to round off my overall portfolio. May have a business or 2 by then also. I just focus on increasing my income each year, then it’s easy to buy at least each 6-12 months.

    Reply

    • July 2, 2013 @ 5:34 am Michael Yardney

      Well done Phil!
      You’re right that negative gearing is not a strategy, but more the result of funding and if handled correctly this system works well.
      You’re clearly living proof of it. Congratulations.
      Michael

      Reply

  6. July 1, 2013 @ 8:37 pm Liam Austin

    Starting young and making sacrifices. Or correctly identifying great value and growth in a property will help you get there. It’s all about finding the right opportunity.

    Reply

    • July 2, 2013 @ 5:36 am Michael Yardney

      You’re right Liam
      As Warren Buffet said “Wealth is the transfer of money from the impatient to the patient.”
      Michael

      Reply

  7. August 20, 2013 @ 12:01 pm Marion

    Great article Michael. I totally agree with you in “if you do what everyone else does, you’ll get the same results everyone else gets”. That’s my motto. So while everyone is furiously trying to buy now because the market is ‘booming’, I’m thinking about which of my properties to sell.

    Reply

  8. October 13, 2013 @ 7:10 pm Taking your first step – Doing the sums! | Landlordism

    […] was reading recently that less than 8% of the Australian population are property investors which equates to about 1.8 […]

    Reply

  9. April 24, 2014 @ 11:39 am The Refined Geek » Why Targeting Negative Gearing Won’t Solve The Problem.

    […] the fact is that the vast majority of property investors in Australia, to the tune of 72.8%, own only a single investment property. They in turn account for just over half the total number of investment properties in Australia. So […]

    Reply

  10. December 4, 2014 @ 9:51 pm Peter

    Hi Michael,
    I just purchased my 5th property (have 4 in Melbourne and now have 1 in Brisbane) and although was difficult to start purchasing the first investment property 7 years ago, I can say that each subsequent purchase does get easier as you can use equity from the previous purchases to fund the deposit and costs for the next. I totally agree with you, 2 properties certainly will not make you wealthy, I feel you need at least 8 to 12 to comfortably retire. You certainly can’t save your way to wealth, this is why I feel property investing is the only real vehicle to gain considerable wealth

    Reply

    • December 4, 2014 @ 10:20 pm Michael Yardney

      Peter
      Well done – you’ve clearly done significantly better than most investors.

      Reply

  11. May 22, 2015 @ 7:50 pm Geoff

    Hi Michael,
    My landlord is taking much of my salary in rent making saving or even investing in a house virtually impossible.

    What do you think about the merits of the Government reducing or culling negative gearing on existing properties in order to enable people on just average incomes like myself to save up for and maintain our own home? Let’s face it people owning their own home are probably doing much better than those still buying a house and therefore can afford to invest their own money without taxpayer help. Don’t you think?

    Reply

    • May 22, 2015 @ 8:04 pm Michael Yardney

      Geoff. If the government makes it harder for your landlord to own a property there will be fewer landlords and your rent goes up, or he’ll look for you to pay more rent. Either way you lose

      Reply


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