• Tom King

A Simple guide to early retirement through property investing


A Simple Guide to a early retirement through property investing

• Working less hours .......

• Choosing to live life on your terms ....

• Spending more time with family.....

Deep down this is everyones dream. This can be achieved through strategic property investing, where you can earn passive income for life. You don't need extraordinary salary or wealth base already in place, this can be achieved on a average income and is suitable for everyone.

Ways to make Money through property

  • Capital Growth: Involves accumulating properties which will grow in value, whilst tenants pay for mortgage down. Essentially your using the banks money to hold an asset base which will appreciate in value, increasing your net worth. The great thing about a property increasing in value is the ability to release the equity built up to then use on further investing, without having to save a full deposit amount on your next investment. If your property portfolio consist of multiple properties you have the choice of selling a few properties and paying of the depending loans on the others, therefore creating a incoming flow of money for life.

  • Manufacturing growth: Buying purchasing properties with “value add potential”, An investor is able to increase the properties value if the market begins to slow. Buying adding value via a lick of paint or small cosmetic renovations, you are able to move through your accumulating journey and manufacture equity. By simply improving the small things within a property a bank will value your property higher than pre renovations and allow you to release that equity for further purchases.

  • Cashflow: Cashflow is the amount of money left over after the properties expenses and your loan repayments. The goal is to get the cashflow of the property to pay for your lifestyle. By holding multiple properties that produce cashflow on a monthly basis. Properties usually start of negatively geared (negative Cashflow) but become positively geared as the loan is payed down and the rent increases. Positive properties start of positively cash flowed right from the get go.

3 stages of your property investment journey

• Accumulation Phase: Involves the accumulation of investment properties. Not just any properties can be purchased, The properties need to be in high growth potential areas, where cashflow analysis need to be done to manage your serviceability to the banks to ensure your


accumulation of properties is a smooth ride. The amount and value of your properties will dictate the Amount you will retire on and the potential risk your willing to take.

  • Consolidation Phase: When you have reached the value of properties suitable for your passive income goal the next phase is reducing the debt on the loans still owing. Different strategies can quicken up this process. The most important ingredient to this phase is time. Letting your perfectly purchased properties grown in value. The passive income will be a result of your loans being reduced and there for your weekly expenses on the property being reduced.

  • Enjoyment Phase: Enjoy the fruits of your portfolio. Reduce work hours and live your life the way you've always wanted too. With regular rent payments coming in to your account you'll have the choose the repeat the 3 phases again, or just sit back and relax.

Property investing strategies


  • Buy and Hold: Involves the acquiring of established properties and waiting for the market to do the heavy lifting for you. The aim with this strategy is to hold a portfolio worth a targeted value. This strategy is consider low risk and does not require much effort other than the odd tenant issue.

  • Investing for Capital growth: Investing for growth means acquiring properties in blue chip locations with excellent Growth potential. Areas where Government are spending money which will bring in high paying jobs and the potential for owner occupiers to pay more for there home. Areas that have growth potential will be areas where there is more than one economy and where there are multiple business sectors present within the one community. Locations in closer proximity to CBD’s and major business districts will be key for these properties. Suburbs also need to have a shortage of present and future housing supply, because its all good to have high demand in a area, but if your using housing supply is unlimited there wont be much pressure on price. These properties will most likely be neutral to negatively geared, so appropriate income and serviceability will be needed to invest.

  • Investing for cashflow: Investing in positive cashflow properties where your mortgage repayments and general expenses are less than the actual rent on the property, therefore putting money into your pocket every week. These properties are normally located further out of CBD’s and major business districts as the value of properties in the area have not outgrown the rents yet. Different ways to achieve a high yielding property are, Dual occupancy properties (duplexes), Regional towns, building granny flats or investing in commercial property. Although investing in just cashflow positive properties sounds extremely appealing, It is not the cashflow which will get you to retire early, its actually the capital growth and your increase in net wealth which will give you options to retire down debt or acquire proper passive income. If your plan is to purchase only cashflow properties, you might not experience the needed growth to increase the pace with your portfolio development, As these extremely positively geared properties are usually located in areas where there aren't as many growth drivers.

  • Buy, renovate and hold: This strategy involves Purchasing a property with value add potential and therefore the option to manufacture capital growth. A fresh lick of paint and a new bathroom can increase the valuation on a property substantially. You can then roll onto the next purchase in your portfolio faster than just waiting for the market to do the lifting. This strategy is medium risk and a careful budget and expenses forecast need to be in place to be successful.


• Property development: This high risk strategy requires a high initial cash investment and extensive knowledge of suburb zoning. Property development in simple terms is the transformation of a piece of land from its current use into a better use which can be sold off or added to a portfolio. Developments can offer higher yields if completed correctly has the rents will be consideration of its completed value when you actually purchased the land at wholesale price.

• Commercial property investment: Commercial property offer much higher yields than residential because it is common practice that the tenant pays for all the outgoings. Commercial property will often require a high cash investment with most lenders requiring a 30% deposit. Although commercial can offer excellent cashflow for a investor the capital growth wont usually be as strong as investing in blue chip residential locations. Commercial is also extremely complicated as the business sector of the tenants are involved in, need to be extensively researched.

Case study Below is a case study of a young couple in there 30’s who don't own any investment properties and are looking to propel themselves to a earlier retirement through property investment. They are hoping to retire on 2000 dollars per week passive income, so lets have a look how there investment journey will look like.



Total Cashflow after the year while holding all properties will be sightly positive (cost nothing to hold)

  • The Acquisition Phase of this couples investments will take 9 years

  • The total value of this couples portfolio is 2million

  • The projected value after 10 years of sitting on portfolio is $3,581,695

  • After All property debt is payed off the couples yearly passive income will be roughly $170,000 P.A (assuming a 5% net yield on all properties)

  • Balancing a Capital growth property with a positively cash flowed property to keep serviceability good with there lenders.

  • By watching there discretionary spending and keeping there budget in check this couple is able to retire on 170k per year whilst also being able to pass there wealth to future generations. The total timeframe will depend on how quickly the couple are able to retire debt and lower there loan to value ratio All properties will be purchased with a 10% deposit with LMI added to the loan. As you can see Average income earners with a disciplined spending approach can ensure they retire early to live life on there own terms all whilst having zero holding costs(only the 10% deposits for each property).