‘Just like a video game’: Property investor reveals secrets to gaining multimillion dollar portfolio

A property investor who owns eight houses revealed how anyone can make themselves a multi-millionaire with just $60,000.

An immigrant who acquired eight homes in 16 years has revealed how an everyday Australian can build their own property portfolio with as little as $60,000.

Sydneysider Lakhwinder Singh commenced his investment journey a few years after arriving in Australia as a 21-year-old exchange student with only $1800 to his name.

After overcoming homelessness, acquiring citizenship and relocating his family from India to Australia, the father-of-two launched his property-buying journey beginning with the family home.

In less than two decades, Mr Singh became the proud owner of multiple investment properties located across four states, collectively valued at $4.5 million.

Now, he is sharing his secrets to success to help inspire others to dip their toes into the property market as Australia’s housing affordability crisis continues.

The most common question answered

With the cost-of-living and rising interest rates on the mind’s of most prospective buyers, Mr Singh told news.com.au the most frequent question he is asked is “how much money is needed to start a multimillion dollar property portfolio?”.

Well, the answer may just surprise you with the value not even close to tipping the six-figure mark.

Mr Singh acquired eight properties in 16 years. Picture: Supplied

While most people save up to $100,000 cash or equity from current investment properties, Mr Singh revealed investors only need three-fifths of that figure.

“Property investment can be started with as low as $60,000 to buy a $350,000 property,” Mr Singh said. “(That value) can cover the deposit and all other buying costs.”

He added this value will be enough to build a multimillion dollar portfolio within five years of purchasing the first home with no extra personal cash contributions required.

With the mean cost of dwellings in Australia around the $880,000 mark for the December 2022 quarter according to the Australian Bureau of Statistics, Mr Singh said it’s easy to believe why a $60,000 deposit wouldn’t be enough.

However, with the right planning and by purchasing a home in a suitable location, the property investor revealed by sharing his own portfolio that a $60,000 deposit is more than adequate.

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One of Mr Singh's West Australian investment properties. Picture: Supplied

What makes a strategic portfolio?

Mr Singh said there are five “data points” a property investor should consider before purchasing a rental property which will enable them to get more bang for their buck.

The first rule of thumb the Value Buyers founder lives by is purchasing a home that has a significant block of land.

“When selecting a house as an investment, 70 per cent or more of your funds should go towards buying the land component of the property,” Mr Singh said.

For those interested in a unit, villa or townhouse, that “land to value” ratio is reduced to 60 per cent.

“You can work out the land to value ratio by collecting data on sold land in that area,” he said.

“Where possible avoid off the plan properties as most of those don’t qualify under this rule.”

Secondly, Mr Singh advised investing in a home that has a “family friendly appeal”. This may include the property being close to schools, shops, parks and swimming facilities.

“Families are emotional buyers and will pay top price when you sell …(Also look for) markets with renter proportion under 30 per cent as higher renter proportion can indicate rougher area,” he said.

Mr Singh with his wife Kuljit Kaur, 18-month old son Harvey Singh and six-year-old son Kohinoor Singh. Picture: Supplied

Another piece of advice is to take notice of “X factor properties” or dwellings that stand out from the crowd. This may include properties on a subdividable piece of land, houses with side access, and those that may need cosmetic renovations.

Mr Singh said sometimes these unusual properties are put on the market for longer at a lower price as buyers can’t identify their growth potential.

The fourth data point is to keep an eye on demand versus supply, with the property investor advising buyers to avoid properties where there is an “imbalance” in the market as prices are typically higher.

In saying that, such imbalances can be a great opportunity for investors who have a property in the area they’d like to sell.

Finally, investors are encouraged to pay attention to rental vacancy rates which could suggest how quickly an investment property will be snapped up by tenants.

“The vacancy rate is a good indicator to help us understand how much stock is in the market and how quickly our property will be rented,” he said.

“Vacancy rates under 1 per cent means severe shortage of properties and less than 1 per cent of rental properties are available for lease.”

Ultimately, Mr Singh said properties that have both short and long term growth potential and good cash flow will create a “scalable portfolio”.

Mr Singh advises prospective investors to buy homes with a 70 per cent land ratio. Picture: Supplied

Things to avoid and look out for

Before you even start thinking about investing in a property, Mr Singh said investors need to be “very disciplined” with the way they spend their money.

The property investor highlighted banks will look at each individual’s spending habits and will lend accordingly, which essentially means the bigger the debt the less you’ll receive as a loan.

One way to avoid not scoring a decent loan is to have a “finance strategy” or “property-savvy” accountant that can help plan “which banks to use first and which lenders to use last”.

“Ideally you want to borrow from main banks first as they have stricter lending criteria and move on to easy to lend banks at a later stage of your portfolio,” Mr Singh said.

Secondly, while $60,000 may be enough for an investor to purchase their first property, the property investor recommends having a “buffer” or emergency fund in place to minimise risk.

Mr Singh said having a buffer for each property will help lower the risks that come with investing. Picture: Supplied

This buffer may be used to make-up for missed rental payments, pay for serviceability issues, cash flow problems or can even be used to save up for your next deposit.

Mr Singh recommends a minimum buffer of $10,000 to $15,000 for each property.

“A good property investor plans for this well in advance either by themselves or with the help of professionals,” he said.

“You need to treat your property portfolio like a business and identify what is lacking in your portfolio, if it is lacking cash flow then plan for the next property a positive cash flow property, if equity then do a small renovation project.

“As long as you keep solving problems in your portfolio you will keep getting rewarded just like a video game.”

Finally, Mr Singh encouraged investors to not let rising interest rates deter them from investing.

“As long as we have buffers in place to ride high interest rate environments for the short term we should be in great position to take advantage of property price rises that can come as a result of supply shortages in most parts of Australia,” he said.

Originally published as ‘Just like a video game’: Property investor reveals secrets to gaining multimillion dollar portfolio