Real Estate Diversification Checklist for Growth

Diversify Your Portfolio - Checklist

1. Getting Started

  • Understand the Basics: Recognize that building a real estate portfolio is a step-by-step journey.
  • First Step: Begin with a single property investment.
  • Realistic Expectations: Accept that success in real estate is not guaranteed and requires patience and possibly some luck.

2. Understanding Market Cycles

  • Property Value Fluctuations: Be prepared for periods of stagnant or falling property prices.
  • Rental Income Variability: Acknowledge that rent income may not always increase steadily.

3. Fundamental Investment Principles

  • Learn the Basics: Familiarize yourself with the foundational principles of real estate investment.
  • Accept Realities: Be ready to manage various aspects like being a landlord, diversifying properties, maximizing tax benefits, and managing significant bank loans.

4. Utilizing Compounding Returns and Leverage

  • Compounding Returns: Understand and apply the concept of compounding in property investment.
  • Leverage (Gearing): Learn to use leverage effectively, balancing the risks and rewards.

5. Managing Risks and Growth

  • Risk Awareness with Leverage: Be conscious of the risks in both rising and falling market conditions.
  • Growth Through Equity: Focus on growing equity in your properties over time.


:rotating_light: You are missing out if you haven’t yet subscribed to our YouTube channel.

6. Handling Debt and Financing

  • Comfort with Debt: Get accustomed to the idea of owing large sums in property investments.
  • Debt Management: Monitor and manage your debt levels responsibly.

7. Portfolio Management

  • Diversification: Spread your investments across different locations and property types.
  • Strategic Buying and Selling: Avoid frequent buying and selling due to high entry and exit costs.

8. Understanding and Using Good vs Bad Debt

  • Good Debt: Prioritize paying off non-tax-deductible (bad) debt over tax-deductible (good) investment debt.

9. Investment Financing Options

  • Recourse Financing: Understand the implications and risks.
  • Non-Recourse Financing: Consider the higher interest rates and restrictions.
  • Limited Recourse Financing: Know the legal requirements, especially for self-managed superannuation funds.

10. Building an Income Stream

  • Rental Income Strategy: Aim for properties that can provide a stable and growing passive income.

Key Considerations for Portfolio Expansion

  • Regular Property Valuation: Keep track of the current value of your properties.
  • Loan-to-Value Ratio (LVR): Maintain a safe LVR, ideally below 80% to avoid lenders’ mortgage insurance.
  • Funding Strategies: Decide if you want to risk other assets for property loans.
  • Tax Implications: Be aware of the tax consequences of buying, holding, and selling properties.
  • Market Research: Conduct thorough research, especially when investing in unfamiliar areas or interstate.
  • Exit Strategy: Plan for how and when you might sell properties to optimize returns and minimize taxes.

Regular Portfolio Review

  • Financial Health Check: Periodically review your portfolio’s performance, debt levels, and growth trajectory.
  • Adjustment and Rebalancing: Make adjustments based on market conditions, financial goals, and risk tolerance.


Make It Real

:point_right: Start Your Journey Today!