Fundamentals of Investment Properties and diversifying your investment properties portfolio

Property Investment in Brisbane

Fundamentals of Investment Properties and diversifying your investment properties portfolio

Posted on November 17, 2019 by Mirren Property Investment

Real estate gains in Australia has been continually growing over the past 25 years and even more so this year. A recent report from CoreLogic, shows that national home prices have increased by 3.5% in September 2019, just a few short months until it beat its record in 2015. Would you know why even you should have a diverse investment properties portfolio? Read along.

With this data, it’s no wonder that many people today dream of becoming wealthy by investing in properties. However, owning just one single property isn’t enough. To make millions in real estate, one should aim to expand, invest in more investment properties, and diversify his investment property portfolio. 

Why is it so essential to create a diverse portfolio? Despite how profitable real estate investing can be, it also comes with risks. The real estate market in Australia experiences significant fluctuations a couple of times each year. If you want to maximize your profits, you need to invest in not just one or two, but multiple kinds of properties. 

Here are some helpful tips to help you grow your real estate investment portfolio in Australia. 

Learn the Basics of Real Estate Investing

Have you ever wondered how real estate investors earn millions from their properties? It’s no secret that real estate can help you build wealth, but the question of “how to do it” remains a mystery for people who little knowledge about real estate investing. 

Most property investors start by owning 1 or 2 properties. They don’t expand simply because they don’t know how to manage their portfolio. If you have played monopoly, you’ll understand the fundamental factors in investment, economics, and risk. 

Winning in real estate investing is conceptually the same. You buy properties, avoid bankruptcy, and make sure you don’t put all your eggs in one basket so that you don’t lose your stream of income. To understand real estate investing, you have to learn these four basic concepts:


Real estate appreciation is known as the increase in the value of a property due to changes in the real estate market. Unlike other assets like automobiles, furniture, or computers, real estate properties increase their value over time. This is caused by the demand and the ever-increasing population in the world. When land or housing is low, there is substantial demand, and values will increase. 

Cash Flow Income

This kind of investment is all about purchasing residential properties such as apartments or homes in order to collect a stream of cash from rent. Aside from residential homes, you can also generate cash-flow income from storage units, car washes, office spaces, and more. 

Expense Ratio

Real estate investments also come with expenses. These expenses are often from the maintenance of the property as well as insurance, pest control, taxes, repairs, and advertising. When investing, you also have to think about the expense ratio for each property you buy. 

Invest in Residential Properties

Residential properties are a common stream of investment in Australia. Residential properties are a fantastic investment because of their strong trend of appreciation of homes in Australia. Real estate has always been in demand in the country because of the ongoing housing shortage

For decades, residential property investments have produced satisfactory returns for various Australian investors, making it the least risky of all kinds of investment. It’s a good start if you’re new to real estate investing and don’t have much in your portfolio. Most residential investments are also easy to manage and maintain. You can even outsource management for a small cost.  

One reason why real estate is great is that many of the costs of owning your own investment properties in Australia come with tax deductibles, including maintenance, advertising, and fees paid on your loan. As the value of your property increases over time, you’ll also receive better long-term returns from your property income. 

Are you thinking of investing in residential real estate? Always remember to renovate before selling! Many inexperienced investors also forget to renovate their purchased properties which is one of the most critical factors in raising rental income and improving the value of their property. It is incredible how a simple paint job and house makeover can do to the value of the property.  

If you’re going to invest in a residential property, don’t be scared to look for homes that may need a little rework. These properties are often sold for a lower price, but you can increase its value with a significant makeover. By adding renovations, you can also find better buyers and renters. 

Investing in Multifamily Properties

The best way to grow your wealth in any investment properties portfolio is to put your assets in “different baskets”. You should consider other types of properties and even locations as you move forward in your investment strategies.  

One way to diversify is to invest in multifamily properties. Often known as multi-dwelling units (MDU), these properties can house two or more families under one roof. Investment properties can come in the form of apartment complexes, townhouses or even condo buildings with more than one residential rentable space. Read here to understand the benefits of dual occupancy homes for investors in Australia.

Multifamily properties can help you earn a more substantial cash flow compared to single-family rentals. They’re also less risky since you have more than one source of cash flow in one rental home. These properties are preferable investment strategies for investors because of the many advantages they can provide. Apartment buildings are much more costly to purchase than a single home, but they also offer higher returns. 

Things To Remember 

Diversification in real estate properties is widely accepted as a good practice in building your investment property portfolio in Australia. However, there are essential things to consider before you start. What to look for when finding your ideal investment property match?

Start small, dream big. Beginner investors who want to explore investment opportunities should consider the strategies listed above before trying other complex investment types. When you start building a more diversified portfolio, you will gain experience you can leverage. Eventually, this will lead to greater efficiency and higher returns. Here’s how to make your investment properties profitable.

Grow your income first. There is an infinite number of investment properties in Australia, but to take advantage of them, you need to have a high income first to be able to put down a deposit and pay the interest on your loan. If this means you need to wait first until you earn enough money, then so be it. Building an investment properties portfolio takes time and patience.

Take risks but not too much risk. The best investor is not the one who takes risks all the time nor the one who doesn’t. If you want to succeed, you must be able to manage your risks well and know when it’s good or not to take risks. 

Diversifying your invesment properties portfolio can be the smartest decision you’ll ever make in your real estate investing journey. If you’re still apprehensive about taking the next step, you can always work with an experienced financial advisor to help you navigate the process, make the best purchase possible, and ensure you’re going to make a smart investment. We can help you understand and achieve your property investment goals, talk to an Investment Property Strategist at Mirren.  


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