gameplanHaving been heavily involved in numerous IT projects, I know it’s crucial to have clearly defined scope and deliverables, which lay the foundation for a successful project.

As someone who is passionate about building wealth via property, I LOVE having a clear goal and a well-thought-out plan that keeps me motivated and on track during the bumpy and exciting investment adventure.

You can’t win the game if you don’t have a game plan.

With a clear goal and a plan, I was able to buy my first house as soon as I graduated, almost pay it off twice, build a foundation investment portfolio of 4 properties and start a small property development project while working full time on a single income with 2 young children. All of this happened within 8 years.

For those of you who are interested in achieving financial security but are unsure how to start, my story shows that you too can do what I have done within 8 years if you have a clear goal, a well-thought-out plan, discipline, resilience and most importantly patience.

I now also run a property financing business supporting like-minded IT professionals build and grow their property portfolio. There are many property investment strategies and plans out there nowadays, however the fundamentals remain the same.

My goal, through a series of articles, is to assist you with answering the fundamental questions below and then mapping out a blue-print accordingly.

So, here goes the first question. 

How many properties do I really need?

To answer this question, I am going to ask you another question. How much do you need for you to stop working full time? to live comfortably by your standard?

When I started, I wanted an after-tax passive income of $80,000, which is approximately $109,600 before tax or $9,133 per month. This is the income from investment properties, not work.

How many properties would I need to get $9,133 rent per month? Let’s assume the rental return is 5%, then it means I’d need to own outright about $2.2 million worth of properties in today’s dollar.

Let’s assume the average value of my investment property is $450,000, then I’d need to own: $2.2 Million/$450,000 = 5 properties outright.

“But what about the debt!!!??”  I hear you ask.

You will need to sell some properties at the end of your investment journey to reduce the debt, so as general rule, you’d need to acquire twice as many properties for you to be able to pay down the debt later on.

So you need to buy 10 and keep all of them for a complete property cycle, which is usually 7 – 10 years, AFTER you have bought the last investment property because the property value usually doubles after 1 property cycle.

At the end of the investment, you sell 4 or 5 properties, which will have doubled in value to clear the debt on the rest of your properties, and you’d end up having 5 properties worth at least $2.2M, and that will give you the the passive income you need for retirement.

Now, this is purely a guide to start you thinking about the value of your portfolio and the approximate number of rental properties you’ll need to own outright in retirement. In other words, your Statement of Work.

In reality, your specific situation could be quite different. It could be that you want more passive income in retirement and are prepared to invest for a little longer or that the rental return is much higher or lower than 5% etc. etc.

Some might say this takes too long, and they want to live a good life now, spend the money while they can. What I just described is indeed a process that requires patience and discipline, however you will be living a much much better life financially with the passive income instead of your super, and/or government pension, and the best part is that if you start early, you might be able to quit working well before the government retirement age, which is 75 now. You might call it quits by 50 and you still have 30 or so years ahead of you. I know what I would choose.