How many investment properties do you need to retire?

Have you wondered how many investment properties you would need for financial freedom?

I’ve found that while most property investors hope to one day replace their personal exertion income with cash from their investment properties, most don’t have a strategy to achieve their goal.

So just how many properties does it take to enable you to quit your day job and live comfortably?

The answer is simple…

It depends.

O.K. that’s probably not what you wanted to hear, but in fact it’s a bad question.

It doesn’t really matter how many properties you own.

What is more important is the value of your asset base and how hard your money works for you.

Why do I say this?

Because I’d rather own one Westfield Shopping Centre than 50 secondary properties in regional Australia.

How will you live off your property portfolio? Property-Game

While many property investors know they want their properties to replace their income, I’ve found most don’t actually think about how they’ll actually achieve financial freedom.

They don’t have a strategy.

They don’t have a plan.

They just hope it will happen.

Other investors think that they’ll live off their rental income, yet I rarely see this happen.

It’s just too hard to grow a portfolio of cash flow positive properties of a sufficient size to replace your income.

On the other hand, the wealthy investors I deal with have built a cash machine by growing a substantial asset base of high growth properties, and then lowering their loan to value ratios (LVR) so they can transition into the next phase, the cash flow phase of their investment life.

They lower their LVR in a variety of ways.


They could: 

  • Stop (or slow down) buying properties, so that while the value of their portfolio keeps rising, their loans remain much the same.
  • Add value to their properties by manufacturing capital growth through renovations or development;
  • Pay off some debt using their superannuation;
  • Reduce their debt by pay off principal and interest; or
  • Sell a property or two.

But the first stage of their wealth creation strategy always involves building a substantial asset base.

Can’t I just live off the rent?

Let’s say you want an annual after tax income of $100,000.

How are you going to achieve that?

How many properties do you need?

If your plan is to eventually pay down your debt and live off the rent, you’ll probably need at least $4million worth of properties with no mortgage to achieve that $100,000 after tax income.

Don’t believe me?

The average gross yield for well located properties in Australia is around 4%, but let’s be generous and say you earn a 4.5% yield across your property portfolio.

This means if you eventually own $1 million worth of properties with no debt, you’ll get $45,000 rent. property mortgage finance money

But you’ll still have to pay rates and taxes and agents commissions and repairs; leaving you with something like $35,000 a year.

And then you’ll have to pay tax on this income.

When you do the sums you’ll see that you need an unencumbered portfolio worth at least $4million to earn that $100,000 a year after tax.

Remember that’s $4 million worth of property and no mortgage debt, otherwise your cash flow will be lower.

And of course you’ll also need to own your own home with no debt against it.

Let me ask you a question…

Will you ever be able to save $4million?

Will you ever build a portfolio that size on a few dollars a week positive cash flow from your rents?

By now it should be clear that the only way to build a substantial asset base is to take advantage of leveraging and compounding growth of well located properties.

In my mind the only way to become financially independent through property is to first grow a substantial asset base (by buying high growth properties) and then transitioning to the next stage – the cash flow stage – by lowering your debt, but not paying it off completely.

Here’s how it works:property data

Fast forward 10 or 15 years and imagine you own your own home plus $5million of well located investment properties.

If you had a typical 80% Loan to Value Ratio, you would be negatively geared.

On the other hand, if you had no debt against your property portfolio you would have positive cash flow, but would forego the benefits of leverage.

Somewhere in the middle, maybe with a 50% LVR, your property portfolio would be self funding. 

You may even have a little cash flow left over, but not enough to live on.

If you think about it, it will be much easier to amass a $5million property portfolio with $2.5 million of debt than the same size portfolio with no debt.House and money

You could then go to the bank and explain you’ve got a self-funding portfolio that isn’t reliant on your income and in fact, there’s a little cash left over for serviceability.

You would then ask for an extra $100,000 loan, so you’re increasing your LVR slightly.

The good news is that you don’t have to pay tax on this money because it’s not income.

But you would have to pay interest, which won’t be tax deductible if you use the money for your living expenses.

This means after the interest payments you’re left with around $93,000 to live off.

Crunch the numbers…

At the end of the year, you’ve “eaten up” your $100,000; but in a good year, your $5 million property portfolio would increase in value by say $500,000.

In an average year it will have increased in value by $400,000 and in a bad year it may have only gone up by $150,000 or $200,000.

Of course your rents will also have increased because your properties have increased in value.

Sure you’ve used up the $100,000 you borrowed, but because your portfolio has risen in value, along with rents, your LVR is less at the end of the year than the beginning, so you finish off the year richer than you began it.

You truly have a cash machine, and then you can do this over and over again.

Does this really work?

In the old days living off equity was easy.  property investment

You just had to go to the bank and get a low doc loan and as long as your properties increased in value it was smooth sailing.

Sure it’s harder today, but it’s definitely do-able.

You just have to lower your LVR to show serviceability to the banks.

Needless to say, you can’t achieve this overnight.

It takes time to build a substantial asset base and a comfortable loan-to-value ratio.

But if you take advantage of the magic of leverage, compounding and time, it happens.

Do you have an asset protection plan?

Of course this strategy depends on the growth in your property portfolio and your ability ride the property cycle. property cycle

This means that as you build your asset base, buying high-growth properties and adding value, you will need an asset protection plan to see you through the ups and down that you’ll experience.

After all, over the next 10 years we’ll have good times and bad.

There will be periods of high interest rates and times of lower interest rates.

And we’ll have periods of strong economic growth, but there will also be downturns.

Savvy investors count on the good times but plan for the downturns by having an asset protection plan, as well as a finance and tax strategy to make sure they set up their structures in the most efficient way.

Don’t get me wrong, while I’ve just made gaining financial freedom from property investing sound simple, it’s not easy.

And that’s not a play on words.protect umbrella portfolio saving money coin insurance rainy day

The fact is, around 20% of those who get involved in property investment sell up in the first year and close to half sell their property in the first 5 years.

And of those investors who stay in property, about 90% never get past their second property.

So if you want financial freedom from property investment to fund your dreams, you’re going to have to do something different to what most property investors are doing.

You’re going to have to listen to different people to who most Australian property investors listen.

You’re going to need to set yourself some goals and follow a strategy that’s known, proven and trusted.

Then you grow your property investment businesses one property at a time.

Of course…you need to buy the right type of properties

One that has a level of scarcity, meaning they will be in continuous strong demand by owner occupiers (to keep pushing up the value) and tenants (to help subsidise your mortgage); in the right location (one that has outperformed the long term averages), at the right time in the property cycle (that would be now in many states) and for the right price. 


To become a successful investor you will need to surround yourself with a team of independent and unbiased professional advisors (not sales people) – a team of people who are known, proven and trusted, so it is probably appropriate to remind you that in changing times like we are experiencing, no one can help you quite like the independent property investment strategists at Metropole.

Remember the multi award winning team at Metropole have no properties to sell, so their advice is independent and unbiased.

If you want to find out a bit more about what is happening in your local market and what our research suggests is in store for us, join us at a free property briefing in Melbourne, Sydney and Brisbane or with our associates in Perth.

Just click on this link to find out more and reserve your place.


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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit

'How many investment properties do you need to retire?' have 88 comments

  1. Avatar

    September 20, 2018 Gus W

    Please stop thinking of other people’s homes as an appropriate investment. It is unethical and a shift will eventually come. You don’t want to be who people are angry with when that happens in case it doesn’t go as pleasantly as we hope it would. Let me be very clear – people’s homes are NOT appropriate investments. Find something else to retire on.


    • Michael Yardney

      September 20, 2018 Michael Yardney

      Gus. I understand your sentiment. But may I ask you- if property investors don’t provide accommodation for the one third of Australians who chose not to buy a home or can’t afford to, who will provide accommodation for them? The government can’t afford to


  2. Avatar

    March 21, 2018 cornelius


    With 3 Million in property I have achieved $115,000 in income. Two Melbourne residential properties net $60,000 and one Melbourne commercial nets $55,000. Capital growth on the residential has averaged 10% and the commercial 5%. It took 25 years to do this and I have zero debt and have had zero debt for 15 years now. I could have made a lot more by borrowing and gearing but the income from property and my business was more than enough for me. Currently I am looking at borrowing $1M at 4.4% against the properties but what for I ask myself? To buy a rundown 1950s house! Stockmarket? I am not smart/dumb enough for trading. More likely I would buy a business that will benefit from Melbourne’s infrastructure boom.


  3. Avatar

    December 6, 2017 James

    Hello, I am sure you know the answer to this, I am just a newbie, I am probably missing something.

    So if you need a LVR of best case 40% on 5 million dollars in property, that would mean $3 million is paid off and $2 million is owing on the loans right?

    And then… you retire.

    You want 100k per year to live off. You ask the bank for a loan. They give you a loan.

    During that year, you need to pay your bills. One of the bills is interest on your loans. 2 millions dollars @ 5% on an interest only loan is 8333.33 per month according to the Aussie home loans calculator, or $99,999.96 per year.

    It seems like you would need the $100k loan per year from the bank just to pay the interest on the $2 million in debt you still have, and even then you would be running at a loss???


    • Michael Yardney

      December 6, 2017 Michael Yardney

      James – have you read any of my books? This concept is fully explained there and they all have a bonus of a calculator you can use to work out the sums.

      Remember…in a good year your $5million portfolio will increase in value by $350 -400,000 also


      • Avatar

        December 7, 2017 James Terenciuk

        Thanks for getting back to me.

        No I haven’t got your books yet, this article popped up in google when I searched “how many properties do you need to retire”. I’m sure if you can explain this to me I will buy your books though.

        Having the properties experience a capital growth of 350-400k doesn’t change that fact that you are only borrowing 100k from the bank in your example in the article above. The interest alone for that year would be close to $100k, regardless of how much your properties go up in value, know what I mean? So if you’re only borrowing 100k to live your year in retirement (as per the article above) and the interest cost alone is 99,999.96, you end up with $0.04 to live that year.

        What am I missing.


        • Michael Yardney

          December 7, 2017 Michael Yardney

          James – what you are missing is that your properties are bringing in income (rent) to pay the (tax deductible) mortgages – this is an extra $100,000 you are borrowing above the mortgages – a separate loan (so you don’t mix business and personal use) and you pay say 5% interest on this leaving you with $95,000 to live on


  4. Avatar

    October 18, 2017 Gary

    Hi Michael, this podcast was pure gold for me in my current situation. I am trying to refine an exit strategy that balances holding on to my assets against selling up and putting into Super progressively from age 60 (legislation permitting). Obviously super gives a higher cash flow return with no tax but the money eventually gets eroded through inflation whereas property values grow. I think a call to Ken at some point might be worthwhile…

    Can I ask you, do you count the PPOR in the LVR calculations? Does it depend whether there is a loan or not against the property? I guess the bottom line is that you count it in the LVR if it is secured against any loans? Many thanks for your assistance.


  5. Avatar

    August 11, 2017 Sarah

    HI Michael,

    I just came across your page and I’m loving it, I will definitely watch your videos and read all your blogs. My goal is to achieve $1000/week passive income to be able to live in Europe 3 months of the year to see my family more often. And my goal is to achieve that sooner rather than later. I know many factors play a role in this but I currently have saved $50,000 deposit and I am looking to buy my first property in Brisbane by the end of the year. Do you think I have any hope at achieving my goal with that little deposit? I’ve been crunching the numbers etc. but investing in a house will definitely get me a loss at the beginning (only a unit will give me a positive or neutral return)

    looking forward to hearing from you


    • Michael Yardney

      August 11, 2017 Michael Yardney

      Sarah – I love your goals, the problem is if you do what most property investors do, you won’t achieve them.
      That’s clearly the fact – 50% of people who get into property investment give up in the first five years, and of those who stay in the game – 92% never get past this second property.
      You will never become rich that way.
      So keep reading and keep educating yourself and follow the mentorship of people who have achieved what you want to achieve, but be careful don’t believe everything you read. And most importantly build a sound team around you.

      Unfortunately the low deposit you have will not allow you to buy the investment grade property – even in Brisbane. Rather than buying the wrong property weighted to have a bigger deposit


  6. Avatar

    December 29, 2016 Don

    Hi Michael,

    This is a great article. I have watched most of your videos and read 02 of your books in addition to many other books. There are few questions on your “Living off Equity Strategy” that you have not explained clearly.

    If a person got a $5M portfolio generating 4.5% yield, it will generate around $225K gross income which will be taxed at the highest tax rate, leaving a net income of $145K . Then you need to pay Interest and holding cost on remaining $2.5M out of after tax income which will be much higher than the net rental income.

    It is not clear to me how a bank would lend any more money to a person approaching age of 60 having $2.5M debt and no other income to service the loan. (I am assuming the person to stop working completely at age of 60, the whole purpose of investing).

    On the other hand lenders will force you to pay off your principal, when you get older and refuse to lend any more funds…..

    your strategy of borrowing $100K every year seem impractical…..Just because you have equity doesn’t mean it can be released without demonstrating serviceability (Capital + Interest).

    I have $1.45M worth of investment properties with 52% LVR and I have paid off my PPR fully. Still many banks strictly looks for serviceability even though I am not even 50 years.

    could you kindly explain with some numerical calculations how this strategy works.


    • Michael Yardney

      December 31, 2016 Michael Yardney

      Don – I understand your concern because currently the banks are making it much more difficult than before and serviceability is measured differently esp. if you own multiple properties.
      However I know many people who are still comfortably using this strategy today -they have substantial portfolios and lowish LVR’s in the order of 40% and proficient finance brokers who understand the principle.
      By the way..what is the alternative? You need an even bigger portfolio and no debt to live off the rentals


  7. Avatar

    August 7, 2016 Helen

    We own our house. I have 2 investment flats/units with regular paying tenants installed (no mortgages at all). This is all good. Where to next? What would you recommend? I was thinking of buying a third and negatively gearing it??


    • Michael Yardney

      August 8, 2016 Michael Yardney

      This blog may give you some clues to your next steps:
      You job is to build a substantial asset base


      • Avatar

        March 15, 2017 Andrew

        Hi Michael, Again great article. I too have read several of your books as well as many others. I would love to implement this strategy but I do have concerns about, set up structure etc…
        My personal situation is one home valued at 2.5M two IPs valued at 3M. (total value 5.5M) – in Sydney inner west.
        OK position but the issue is I have high loan on home (1.6M) and moderate on IPs (1.5M) long story but have ended up with larger loan on home and about 20K positive on IPs. ( I do also have a 300K buffer loan available – again tied to my home..) I don’t really want to sell down but I’m curious if there is a smarter way.. I am 45 years old, but I would really like to start to spend more time doing what I link as I get into my 50s..
        Is this possible.?


        • Michael Yardney

          March 15, 2017 Michael Yardney

          Congratulations on what you’ve achieved, but…
          Yes – there is a smart way and while I don’t know your circumstances this is exactly what Ken Raiss specialises in at Metropole Wealth Advisory Why not email me your contact details (email and phone number) and I’ll get someone to chat with you – [email protected]


  8. Avatar

    March 15, 2016 anthony

    hi micheal I owe 23000 on my house and have 500.000 in equity i want to set myself up as im 52 this year but my job looks like they want to bring in forced redundancy would it be wise to start now before they bring it in or wait till they do it I have just 12 years service as well it has me stumped


    • Michael Yardney

      March 15, 2016 Michael Yardney

      Clearly you’ll have to take your income stability into accoutn as you put a proeprty and finance strategy together, but the large amount of equity you have should be put to better use


  9. Avatar

    December 21, 2015 Amy

    Hi Michael, you mention this strategy will work with properties owned in your own name or trusts. Whilst owning multiple properties through trusts is well documented as a sensible structure for building a property portfolio, have you seen it common place for high income salaried professionals who do not work in high risk industries to build a large portfolio in their own name? Assuming the portfolio will be largely negatively geared during the accumulation phase, in essence, favouring the tax/cashflow benefit over the asset protection?


    • Michael Yardney

      December 21, 2015 Michael Yardney

      Yes I have seen it, but often those who do manage to build a substantial portfolio then regret they have their proeprties int he wrong entity.
      Trusts aren’t just for risk protection – estate planning is another important issue


  10. Avatar

    May 15, 2015 Josh

    This is the problem with society.. people with money avoid tax and only the banks make money from them.. bending the system for your own short term gain is pretty much everyones aim .. eventually the system will bust from selfishness or more likely inequality will become greater and greater..


    • Michael Yardney

      May 15, 2015 Michael Yardney

      It’s a pity you have such a negative view – much of our tax is paid by the wealthiest Australians


      • Avatar

        May 21, 2015 Josh

        You’re advocating a method of tax avoidance here though, for personal gain. So certainly the wealthy people who pay all this tax are not people you have advised – as they pay none.. An electrician who is paying a mortgage who has 50k equity would pay more tax than these people who have been able to accumulate 2.5M in equity and now effectively do nothing more than oversee their property portfolio. There are also many issues resulting from people who manipulate the property market for personal gain. This Australian documentary highlights this I would encourage people to look at it and consider the ethical consequences of their decisions on society as a whole. What kind of world do you want to live in?


        • Michael Yardney

          May 21, 2015 Michael Yardney

          I’m not sure where I’m advocating tax avoidance – there’s nothing illegal suggested here.
          What I’ve suggested are the normal bussiness dedcuation every business owner gets- and your electrician could also get them if he set up his own electrical business rather than being an employee


          • Avatar

            May 22, 2015 Josh

            From what I understood, you’re saying instead of paying income tax on 100k made through rentals, tweak your’e LVR, take a bank loan, cop the 9% interest and save yourself about 20k in income tax. Keeping the cycle fed by growth in your property assets. I think it’s very clever and you’re right not at all illegal, however I believe it’s ethically wrong. What would a person following this advice be contributing to the country if they are neither working, nor paying any income tax? Should a person who has made anywhere from 150-400k in a year for simply holding an investment portfolio not be expected to contribute any tax, while a person working in a factory 40 hours a wk pays a large portion of their salary?? Do you believe that is fair? I don’t judge your advice, it’s brilliant in fact, however there is a clear ethical issue, which has many repercussions on society at large. Really the responsibility in my opinion lies in a shift in taxation laws from income/service towards a land tax of some form. I want to see the future of this country be as fair and as equal as possible, with opportunity for everyone who has a go. Unfortunately I fear this will not be the case. The issue of investors being able to make tax free profit is very much at the core of why that is so.

          • Michael Yardney

            May 22, 2015 Michael Yardney

            Josh, Where you have it wrong is that the average investor who negatively gears is NOT an ugly greedy unemployed person not paying tax. ATO stats show most property investors are ordinary mum and dad working classs Australians who are making an effort to look after their financial futures, rather than counting o the government to do so

          • Avatar

            May 22, 2015 Josh

            I’m not saying these people are ugly or anything of the sort. I know for a fact many investors worked hard over decades to become financially comfortable. I just wonder whether a person making 100-450k a year from properties should not be required to pay any income tax? By employing your method they are able to avoid this. I would love to incorporate this into my own long term financial strategy, I just question whether it is a fair/right thing to do.

  11. Avatar

    April 21, 2015 No Nonsense Landlord

    I have 24 properties, in 7 buildings, 4 are paid off. Plus my own home. I think 24 renters are enough to retire on.


  12. Avatar

    March 8, 2015 Renee

    Hi there im 32 single woman very interested in setting up my future for retirement. I have just purchased my 3rd property, and living in a house provided by the government for working regional. I only pay $50 a week rent, so ive worked for 3 yrs to have enough savings and pay off the capital of the first two places. Bought in 2003, 2011 and 2015 most recent. The rent of all 3 covers the mortgages and im only up for rates/strata fess/insurances and maintenance. I mixed my purchases to try hopefully make a mint on one or all hopefully by buying a 2×1 apartment with ocean views, a coastal 4×2 house on a large block close to big shops and transport, and the most recent, a 3×2 5km from city,500m from swan river, and 5km feom airport , targeting the CBD execs and fly in fly out workers needing to be close to airport. The reason for my reply to you is to ask for advice on how i can advantage myself financially in my position now. So with 3 properties im up for about $15,000 a year off my wage to support these places and i have 35k saved also. Do i pay the highest mortgage down to reduce the interest or concentrate on paying the smallest mortgage of 165k down to nothing over next 3 yrs to plan to move into that one and live mortgage free.. Or sell the property with smaller mortgage (current equity in that house is 200k) , and pay the 200k straight on the highest mortgage, the house near city and airport getting the highest rent and highest demand for rental property? I have all this but quite inexperienced and done it all blind really on my own… My plan has been to Buy, save more for deposit on next place whilst also paying off mortgage a little, then buy, and save again for next place etc.. Ficusing on buying places with rental demand and good steong capital growth. ive been managing the first two for whole time its rented but the third place i have managed for me as i live 2400km away from it.. All going smoothly so far and not noticing the bank account go down at all.. In fact its slowly rising… 🙂 any advice for a single lady investor to protect what i have too in that unforseen chance of meeting mr right?? Haha thankyoj and i really enjoyed your article. Cheers


  13. Avatar

    September 25, 2014 Adam Sweeny

    GREAT article Michael

    Would you believe that after months of scouring the internet, yours is the only piece of information i’ve found that describes a realistic and understandable path for passive wealth creating through property investment?

    Would love to read more in depth about this strategy with some longer examples. Wait don’t tell me, I should read your book shouldn’t I? Maybe I will now!



  14. Avatar

    August 31, 2014 Jennifer

    I am 39. I own my home outright. I have 2.5 mil cash. I would like to retire on after tax income of 100k per annum. From your article it sounds like I can just borrow 2.5m and control a 5m property portfolio, allowing me to retire right now. In Sydney suburbs close to the city center where properties have shown best growth and median prices are around 1.5mil it sounds like I only need 3 or 4 properties to achieve my retirement goal. Is this too simplistic or can I really retire shortly?


    • Michael Yardney

      August 31, 2014 Michael Yardney

      Congratulations for what you’ve achieved so far.
      It sounds like you’re in a great position financially.
      The sums you suggest are correct, but it really depends on what sort of a lifestyle you desire. Most of my clients spend a lot more in retirement (enjoying their lives) than they do during the years they were working.
      So while you could have a very modest retirement now, I’d rather see you build a bigger asset base.
      Then when you buy your investment properties, I’d be more comfortable with some diversification – not all in one city


      • Avatar

        February 21, 2015 Doug

        Interesting article. It was over 30years old before I really understood the principles of compound growth and leverage described above, properly. I am still in the accumulation phase. I am 41 now with a good income and have 7 properties worth AUD 5M in 3 countries. I have a total AUD 2.8M mortgage.

        I will buy property number 8 this year. I am small in comparison to some investors here but have discovered some important points along the way through trial and error.

        1. Buy in the right area. I focus now on large city centres now (or close surrounds), where there will always be population growth
        2. Get a good agent. A good agent will increase your chances of finding a good tenant. A good tenant will look after your place and pay rent on time. Cash flow is so important.

        Finally, while I don’t mind spending money ie. keeping maintenance up, or paying more for a better quality property, I absolutely hate wasting money. I haved worked hard in my life and negotiated good agreements along the way.

        As such, I have always been on the lookout for good quality buyers agents but find most are coy about their charges. Some even ask for a 90 minute interview to “discuss your needs” before they will discuss charges.

        Obviously in the long run a few extra thousand dollars here or there makes little difference, particularly if you buy a good property, that achieves growth. However, purchase costs make up a big part of ones ability to either enter the market or grow a portfolio further. As such, would you give readers some idea about what your charges are please?


        • Michael Yardney

          February 21, 2015 Michael Yardney

          my team at Metropole are clearly Australia’s largest buyers agents and we don’t hide our fees.
          In fact they are given them in writing before they even meet us.
          However fees are only part of the equation. Before you even get to see a buyers agent at Metropole you must formulate a plan with a property strategist

          Remember…the cheapest buyers agent isn’t the one with the lowest fees. It’s the one that helps you the most in achieving your goals


  15. Avatar

    July 21, 2014 Jose

    Hi Michael,

    Which structures will and won’t allow this ” living off equity ” ? Surely in a SMSF one cannot just UP THE viridian LOAN against increasing equity and go spend it. There are too many rules. Can you please advise us.


    • Michael Yardney

      July 21, 2014 Michael Yardney

      I’m not able to give you acounting advice, but you’re right – buying in a SMSF does not allow you to refinance. However you can do so with properties in your own name or in trust startuctures


  16. Avatar

    April 15, 2014 Graeme


    Thanks for that.
    I did get a confirmation email to say that Jo would call this week – unless it doesn’t work with New Zealanders 🙂

    Thanks for your reply – that now brings up more questions than anything for me though!
    Is it okay to ask here, or not really the place for it?



    • Michael Yardney

      April 15, 2014 Michael Yardney


      This is not the venue for discussing your personal circumstances – Jo will be in contact or you can call her +613 9591 8888


  17. Avatar

    April 14, 2014 Graeme

    Interesting article, thanks Michael.
    I see it was written a couple of years ago now but must have resurfaced 🙂

    I agree somewhat with what you say, although I would have to say the yields you mention are very low and it sounds like you rely solely on capital gains to make any money, apart from maybe a little bit of cashflow if the properties are positively geared.
    I live in NZ and have been investing for quite a few years now, also do a lot of trading etc. Currently I have 45 properties including a commercial one and the house I live in which has now mortgage. I used to have 65 or so a few years ago, but had a couple of hiccups along the way, one cost 1.5 million and the other also cost a lot, which was a separation from my partner.
    However I haven’t had a job now for 23 years, so overall things are working out well. I also wrote a book in NZ on property which has been a best seller here.
    The yields here I get in the city I live are over 10% if you can buy well, that is 80% or so of fair market value. Most people will say it is impossible to get that unless you go into areas that aren’t really suitable for renting to tenants, however if you buy well, then you can easily achieve that if you are patient. My loans are a mixture of interest only and P&I , about half and half and LVR approx 50% with a cashflow of approx $10k a month after expenses. With having 22 or so loans on P & I, this also pays off around $15,000 a month (which increases slightly each month) of principle.
    I have never relied on capital gains ever, and although the market has increased here like it does over time in most places, this I think is one of the major factors in people getting caught out. I have attended a few seminars in Australia over the years and always used to say to people – don’t keep refinancing and leveraging up when prices go up, property doesn’t always go up in value! Nobody listened and just thought I was stupid saying such things, but now when I look back and have seen how many of those same people went bankrupt, or very close to it, I wonder if they’d remember what was said to them. I am very conservative with investing so never rely on properties going up, in fact if anything I would prefer them to go down! The reason being, I could buy more with better yields. I’m sure in Australia you could get better yields than the 4.5% or so that Michael mentioned, my minimum is 8%, otherwise I just don’t buy (as a buy and hold).
    So overall borrowing for me currently is approx $4 million and $8 million of property. Slowly they wil get paid off and cashflow will keep increasing as each one gets paid off. At the moment 20 of the loans are less than $100k, although some of those are on I/O and will be paid off moreso with profits from trading. In NZ we don’t have stamp duty, so it makes trading a lot easier and profitable.

    Thanks again Michael, I do enjoy your articles.
    I enquired about the seminar you are running in Brisbane in May last week, so hopefully hear back from someone about it.

    Graeme Fowler


    • Michael Yardney

      April 14, 2014 Michael Yardney

      Graeme Thanks for your comments.
      This system relies on capital growth and does NOT really work in NZ – the market is very different there.

      However many of our New Zealand clients invest this way in Australia and it’s worked well for them.

      As for enquiring about Wealth Retreat – Jo says she hasn’t recievd your enquiry – please email her directly at [email protected]


  18. Avatar

    April 9, 2014 David

    Hi Michael,
    As always love your work!
    Previously $10 mil was the amount mentioned before now it $5mil (I could be mistaken). what was the reasoning for halving it? I understand the concept, and it varies on individual requirements, but what was your line of thinking? People saving more, cost of living down, average expenses?


    • Michael Yardney

      April 9, 2014 Michael Yardney

      Thanks David How much do you need – it really depends on how much money you want your cash machine to provide you. For some $5million will be enough but for many it won’t.


  19. Avatar

    April 7, 2014 craig

    Hi Michael, Im 43 with a small 50 acre lot with house valued at 720k I owe 170k Im wanting to buy another property. Im thinking I should buy into where I want to retire now and rent it out, so by the time it comes to retiring it will be worth a lot more and paid off, then I could sell my exciting house to live off. Or would you suggest start building a unit portfolio.


    • Michael Yardney

      April 7, 2014 Michael Yardney

      Thanks for your question, I can’t give you specific advice, because I don’t know enough about you, but I definitely would NOT by a property near where you want to retire yet.
      I would suggest you build your asset base by growing a significant property portfolio over the years.
      Then in the future, you’ll be able to own any retirement place you like


  20. Avatar

    April 5, 2014 Sebastian

    Hi Michael,
    Thanks for a great article. My name is sebastian I am 25 and have four kids, I have one investement property with a mortgage of 225,000 that is worth 300,000 and am renting at the moment, I have an income of about 90,000 and I am really sturggling on what the way forward is for me and am looking for a mentor but cannot find anyone that will help. I live in melbourne is there anywhere you know of that I can find a mentor as I know after reading robert kyisoki books that it is important.?


  21. Avatar

    January 15, 2014 Patrick

    Hi,we are in our early 50’s and are looking at purchasing between 2 -4 Units in a low housing area in nsw,where units sell between $270,000 – $350,000 each,we are self employed and are comfortable with no mortgage and have a loan of 800k to invest,would you think with this loan would it be better to go for 3 low priced units or go for 1 or 2 middle of the road units. We know it all goes on what we can afford on repayments, but would it be better to go for the low cost units as we would like to build a portfolio of 10 – 15 properties before we retire.


    • Michael Yardney

      January 15, 2014 Michael Yardney

      It’s not the number of properties you own that’s important – it’s the size of your asset base and the quality of your properties.
      I would rather you buy one or 2 well located properties in the inner ring suburbs of Sydney than 4 in lower prices areas


  22. Avatar

    December 11, 2013 Cam C

    Thanks I really enjoyed reading this.

    I’m a little embarrassed to say that my wife and I are in our mid forties with 2 very young kids, an $850K mortgage (prob $200K equity), $200K super and that’s it (we’ve always worked but a few things haven’t gone our way). With about 20 years left for us working, could we achieve this sort of thing with good income?


    • Michael Yardney

      December 11, 2013 Michael Yardney

      Cam. Thanks for your comment – there is nothing you should be embarrassed about.
      Now it’s time to take action. Learn and educate yourself, then get a good team around you to help you formulate a plan and take action.
      Use your good income to save a deposit and then buy the right type of property. Then let time, leverage and compounding work its magic


  23. Avatar

    November 11, 2013 Robert.a

    Great advice Michael,I put a strategy in place for when I turned forty,which was feb 2013,to have 2 investment properties which the rent is at 5% so both cost me $40 a week,after tax they cost me nothing at interest only loans.both low doc bein self employed,one I borrowed 100% the other 80%,with the 2nd I used my redraw from my home to purchase,which means come tax time I claim a third back. 3properties valued at 1.8m my debt is 700k.Then my next step is to purchase a investment property through my super next aim is to have choices at 60 years of age.wife and I still have our family time with 2kids and enjoy allocated time away each year,I think it all needs to be balanced.any other advise michael,cheers,


    • Michael Yardney

      November 11, 2013 Michael Yardney

      Well done Robert, you’re definitely on your way to financial security, but to make sure you don’t get stuck along the way I believe you need to own the right type of property – high growth properties. That’s the only way to get the deposit for your next property and the one after that


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    February 24, 2013 Greg Dixon

    Awesome mate. Thanks


  25. Avatar

    February 22, 2013 Christine Penfold

    Have you thought of moving into a rental property and adding your personal home into your business? A part time job on the weekend just to help until you can perhaps have a good look at refinancing your properties. Talk to your accountant about taxation and maybe getting your investment entitlement paid weekly on your career salary.


  26. Avatar

    February 22, 2013 Sally Thompson

    It was nice to come across this article today and I have read your books and many others always looking for information to hone our property portfolio. Allowing time and compounding to work it’s magic does work. We have been investing since the 80’s have set goals and bought in the suburbs at first, sold them and then bought in inner city appartments. it is quite surreal and kind of like traiding up from houses to blocks of appartments in Monopoly. The apartments are in different cities so if one market is down the others are ok. Our kids now appreciate why they had to go without some of the things that their friends enjoyed and are both buying property even in today’s market.


  27. Avatar

    February 15, 2013 FXD

    This is a bit of a late reply for such old but great article so hopefully Michael and/or someone else is
    reading and still be able to comment.

    My current positions are as follow (rounded up/down):
    PPOR valuation: 800K, mortgage: 220K
    IP1 valuation: 600K, mortgage: 670K,
    IP2 valuation 1.2m, mortgage: 410K
    Total: 2.6m, mortgage: 1.3m, LVR: abour 50%

    But I find myself cashflow stretched with 2 x IPs negatively geared due to low rent and therefore
    unable to grow the portfolio further. Both IPs are older houses are on large blocks.
    Development/subdivision will incur *additional* $$ so I am stuck.

    Any comment/idea/suggestion anyone ?


    • Avatar

      May 30, 2016 Carlowe

      FXD, though in a much reduced position to yours, I sympathise. I need cash to develop my properties, in order to improve my position, and I can’t. The one I live in is all debt, which is the wrong way around, but the two investment ones are nearly paying for themselves. Catch-22. I could sell up one of the investment properties to develop the other, I guess, but it feels like a step backwards.


  28. Avatar

    May 30, 2012 Hew

    P.S. It would be in the interests of the cashflow ‘no brainers’ and know it alls to read this expert article carefully and take note.


  29. Avatar

    May 30, 2012 Hew

    This is one of the best articles I have read on property investing in Australia. Thank you Michael Yardney


  30. Avatar

    May 30, 2012 Chris


    This is a high risk approach for client to take, the suggestion being you maintain a lvr of 50% for the balance of your life? What happens if property prices fall for extended period and the bank won’t allow the extra drawdown tto fund your lifestyle? Suddenly you are recreating the GFC.


    • Michael Yardney

      May 30, 2012 Michael Yardney

      If you run this strategy correctly, you’ll find your LVR’s get lower and lower – and your cashflow gets better and better. Have you read the full details of this strategy in my book – How to grow a multi million dollar property portfolio – in your spare time?


  31. Avatar

    May 29, 2012 Lee

    How does one accumulate $5m worth of property and have it at a 50% lvr? That just seems remarkably unobtainable. By the time you are close your target will have moved due to inflation. Do you have any simulations of this type of accumulation. The simulation should use averages as inputs.


    • Michael Yardney

      May 29, 2012 Michael Yardney

      I know it sounds a difficult task. It doesn’t happen overnight and you can’t do it through savings, rent or cash flow.
      You need to set a strategy, buy high growth properties and allow time and compounding to work it’s magic. It takes at least 2 property cycles – you can hear some great examples here:


      • Avatar

        March 20, 2016 Jerry

        What is high growth property?


        • Michael Yardney

          March 20, 2016 Michael Yardney

          If you read a few of my blogs onthis site you’ll better understand what makes an “investment grade property” and why most aren’t


          • Avatar

            May 30, 2016 Carlowe

            Hi Michael,
            Its good the way you reply to people and make connections.

            I find my self a little stumped, with two investment properties in good locations pretty much breaking even between them, but my home in a regional area is all debt (long story). This puts me in a silly position, if I sell the home to pay off the debt then I either have to rent or kick out a tenant, neither of which sound like a good idea!

            It would not be an issue if it were not for an uncertain employment future. Like another poster here, I can’t actually fund development on any of the three, all of which are capable.

            Any thoughts you could offer?

            Thanks 🙂

          • Michael Yardney

            May 30, 2016 Michael Yardney

            You’re right – you’re not in a good position are you?
            If you’re investment properties are in good locations they should be growing in value significantly, making up for your home in a regional (poor growth location)
            As for your long story about all the debt against your home – it’s time to spend less than you earn and start paying off your loans – there’s really no other way

  32. Avatar

    May 28, 2012 Nigel Ward

    Interesting way of looking at things. Thanks Michael. It has made me totally rethink my strategy


  33. Avatar

    May 27, 2012 Gerben

    Excelent article. In fact this should be taught in schools as part of the standard curriculum, in my opinion.
    Question: you use a 50% LVR in this example. What would be the maximum allowable LVR to safely adopt this strategy? Is 65% okay for example?


    • Michael Yardney

      May 27, 2012 Michael Yardney

      I’m suggesting you lower your LVR’s to the point that your property portfolio services its own loans and even has a little surplus.
      The exact level of LVR will vary from person to person depending upon the nature and the effectiveness of your investment property portfolio


  34. Avatar

    May 25, 2012 Julie

    Thanks Michael – this in one thing I have been working on – Strategy to retire from our Investment Properties. And yes every ones Circumstances are different – being self employed – we have no one paying us super so we decided Investment properties the way to go. Living in Regional Qld I found you must constantly be watching the market – and having been in the low period we are starting the grow period – so this is when you have to be ready to Value your properties to get the LVR’s correct to have properties stand alone – we borrowed 110% on each IP – but because value has grown so much in one property – we can release security from our PPR for 2 of our IPs – so the 1 IP is secured with the other IP so both are released from our PPR – but the timing must be right to get the correct LVRs needed to do this. But this helps asset protect our PPR – plus the 2 IPs are in a Trust. Everyone says dont sell – but because of our circumstances we own our PPR and will have to sell hopefully only one of our IPs to payout the others so we can 100% own them with no payments – and live off the rent. It is so important to realise Peoples Circumstances must be adopted to the Strategy you use to manage your Investment Porperties for retirement – and constantly update your plan to make it work!!


  35. Avatar

    May 25, 2012 Paul

    That’s a great article.
    I am actually planning my strategy around this basic concept but hadn’t realised that there are others doing it too! So it was a relief to read about it and give me confidence that I am in fact on the right track (for me!).


  36. Avatar

    May 25, 2012 Kaz

    My husband and I are glad to stick to our plan, and we are now half way there. Obviously it is not easy at all, at times we felt the pinch but my husband loves this quote “Is difficult but not impossible”. Thank you Michael for such good articles.


  37. Avatar

    May 25, 2012 annette pace-muscio

    Thankyou Michael for breaking it down so simply for all to understand.


  38. Avatar

    May 25, 2012 Neil b

    Thanks for another great article Michael.
    It gives a very different perspective. But, can it really be achieved today?


    • Avatar

      May 25, 2012 Dave

      Most Definately, In the last 10 years we had the war in iraq, tsunamis, 911 (ok11 years), and the GFC to name a few, but the medium price still more then doubled (especially Michael chosen areas). With the extra equity you borrow to build your asset base, and when you have that amount (for eg. 4-5mill) you let it grow some more (or pay it down) and borrow to live off. You live in the now, but you plan for the 5, 10, 20 years. Will the current problems be around next year – maybe, will other problems arise – yes, will it matter in the long term- no, cause it hasnt before.


    • Avatar

      May 25, 2012 Lyn

      Yes I think i think it can be achieved medium term . The ride could get scary if the interest rates rise but if you concentrate on high yielding properties financial independence can be achieved


    • Michael Yardney

      May 25, 2012 Michael Yardney

      Thanks for your comment.

      Is it possible – definitely – I’ve just arrived on the Gold Coast to spend 5 days with a group of investors at Wealth Retreat, who have done this – who are financially free.
      Is it easy – no it isn’t. It’s too easy to get attracted by the next “shiny toy” – and get rich quick schemes. Yet is some can do it – so can you!


      • Avatar

        January 21, 2015 Luke

        Hang on a second, that $100k borrowing will have ongoing interest correct? That interest isn’t therefore deductible is it?
        Unless you can say that was your full time job managing it right? and therefore these would need to be owned by a different entity?


        • Michael Yardney

          January 21, 2015 Michael Yardney

          You’re right Luke.
          If you borrow interest to live on (rather than for business purposes) it is NOT deductible.

          So let’s say your properties increased in value by $150,000 over the last year – that is income – it’s your equity/money. It’s passive income you didn’t have to work for.

          If you did work for it you’d pay 40% or more in tax and keep 60%. If you borrow against it you pay 5% in interest and keep 95%.

          I know which I’d rather


          • Avatar

            March 28, 2015 Jeff

            I think you’re saying that if you increase your loan by $100,000, you’ll pay 5% in interest for the year, giving you $95,000 to spend. But won’t you also be charged 5% the year after, and forever more? I realise the LVR will constantly improve itself due to rising property values, but are you suggesting the rental income increases will cover the extra (and year-on-year ever increasing) repayments?

          • Michael Yardney

            March 28, 2015 Michael Yardney


            You’ve clearly understood the principal. But remember when you have a big enough asset base you’re not as reliant on rents – because you can borrow again form your now larger asset base – of course this means you need to own the right properties, have the right finance structures in place and realise that in any one property cycle there will be a number of years where you will not get capital growth – in fact property values will fall – hence the importance of a sufficiently large buffer

          • Avatar

            June 2, 2016 Carlowe

            Thanks for the reply below.

            I understand what you are saying; but feel motivated to defend my position –
            – I have reached the income ceiling for my profession and age, and earning under the tax cut threshold for this budget;
            – I don’t spend anything extra;
            – I don’t have holidays,
            – I don’t have credit cards or other loans.
            – Insurance is my single biggest cost apart from the mortgage, and I have to live somewhere.
            – There is nothing extra to put on the mortgage, or it would be there already (I am always in advance by a couple of thousand). The portfolio is growing at an average of 17.5K per year over the last 5 years; what I meant was they are literally on the positive gearing threshold. This should have been a secure position.

            Last year Centrelink penalised me with “deemed income” for having one negatively geared property, when I was unemployed for the first time in 25 years. This used up my reserves.

            I heed the advice not to sell, but between Govt policy and tough economic times, I can see my hard work going up in smoke. I’ll keep seeking inspiration from here, but I have realised the structure of our investment system does not work for lower income earners.

          • Michael Yardney

            June 2, 2016 Michael Yardney

            Please don’t feel the need to justify your position – in fact I don’t know anything about you so my responses to comments are always very general.

            What I do know is there is not a “right number” of properties to own – it depends ont he size of your asset base and the quality of the properties

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