Most portfolios do not stop at ten. They stop at two.
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Why good earners get stuck
Nothing about you changed. Your income did not drop. The bank still said no.
Somewhere between property one and property three the maths quietly turns against you, and nobody warns you it is going to. When you sit with that many investors you stop seeing bad luck and start seeing patterns. All three are in the report in full, including how to tell whether you have them. Nothing held back for a sales call.
Nobody gets stuck at two because they ran out of deposit.
They get stuck because of a decision made before they bought.
They look like three different problems. Wrong structure, wrong timing, wrong research. They are not. They are three routes to the same wall, and every one of them is cheap to fix before you buy and painful to fix afterwards.
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Three routes to the same wall
The most expensive one is the hardest to undo.
Property one goes in your own name, or in both names with your partner. Simplest option, the bank is comfortable, nobody raises an alternative. Property two is usually fine too. Then property three gets declined, and nobody can tell you exactly why.
Approval
The lender will not go again. Every loan in your personal name sits on your personal balance sheet, and when they assess you they count the full debt of every property you own, but only part of the rental income. Each purchase adds more to one side than the other.
Cashflow
Approved, but you still have to carry it. Another $1,500 a month of negative cashflow on top of the mortgage, daycare and everything else. It arrives faster than people expect, and it is a life problem rather than a spreadsheet one.
The level tells you where a market has been. The rate of change tells you where it is going.
A vacancy rate of 2% sounds tight. But a 2% that was 4% a year ago is a market tightening fast, and a 2% that was 1% a year ago is a market coming off the boil. Same number, opposite conclusions. Almost everyone reads the first and ignores the second.
Inside the report
What's Inside
Mistake one, in full: the wrong entity
Why the structure chosen by default caps your borrowing before you start, how a lender actually reads your third application, and the four signs it is you. Close to irreversible, because moving later triggers stamp duty and CGT.
Mistake two: arriving late to the cycle
Sale agreed, exchange, settlement, reported median. Twelve to eighteen months of lag between the market moving and you reading about it. Plus the four leading indicators that turn first, all of them publicly measurable.
Mistake three: reading the level, not the direction
The single most useful thing in the report, and the thing almost nobody does, because it means holding a history for every suburb rather than looking up a number today.
All 31 data points, seven categories
Demand, supply, price, rental, affordability, demographics and infrastructure. The entire list we screen every suburb against, every month, printed in full so you can run it yourself.
How to tell which ones you have
A short checklist against each mistake, plus what each one actually costs you. Most investors we meet have at least one. Plenty have all three.
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Who's behind this
We made most of these mistakes ourselves.
We are two 35 year olds who did this on salaries, in jobs a lot like yours. We made most of the mistakes in this report before we started making a living out of helping other people avoid them.
Nikhil Sreedhar
Ahijith Chandra
Handle is a research led buyers agency helping Australian professionals build portfolios that eventually make the job optional. Between us we hold nineteen properties worth around $16 million, every one of them bought while we were still working full time. None of these three mistakes are about being bad with money or not working hard enough.
Licensed buyers agency
Do not take our word for any of it.
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So which ones do you have?
All three in full, how to tell whether you have them, and what each one costs you if you do not catch it until property three. If it saves you one bad purchase it has done its job.
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Handle Properties is a licensed buyers agency. We are not financial advisers, credit advisers, tax agents or superannuation advisers. This report is general information about property investing and does not take account of your objectives, financial situation or needs. It is not a recommendation to buy, sell or hold any property or financial product.
Charts and figures shown in the report are illustrative. Lender serviceability treatment, rental income shading and assessment rates differ between lenders and change over time. Entity and structuring decisions in particular have tax and legal consequences that depend entirely on your circumstances and should be made with your accountant and solicitor. Past performance is not a guide to future performance and property values can fall as well as rise.
Title, structuring and contract matters should be handled by your conveyancer, solicitor and accountant. Before acting on anything in this report, speak with your accountant, a licensed financial adviser and your broker.
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The 3 Mistakes that kill investment portfolios
Why good earners get stuck at two, and how to tell early enough to fix it.