5 Strategic Steps to Building Your Real Estate Portfolio

Everybody knows that investing in real estate can be very profitable. When it’s done right. And there is a fundamental 5 Step Strategic Process for doing a right.

And here it is:


First, and before you even begin thinking about buying a property or investing in real estate (or any investment for that matter) we need to be able to get crystal clear on exactly where you are heading.

You don’t want to go out and buy just any property and hope that it will do what you want. You must get strategic about it.

In the words of Steven Covey we – ‘Start with the end in mind!

This forms part of the strategic planning process where we determine where we are today i.e. your ‘Current State’, and determine where you want to be in the future, that is your ‘Desired Future State.’


This desired future state can take on many forms, for example, this may be determined by ‘how much’ you want to live on when you do retire or ‘when’ you want to stop working, or the ‘number of investment properties’ you would like to own in your portfolio.

In other words, what is the purpose of the real estate investment? Is it to increase your week to week income, to improve your lifestyle or your asset base or is the investment to remove the reliance on your super funds at retirement?

Once we understand the purpose of the investment and know exactly where we want to go, then we can begin the implementation process and work out how to get there.

This is where we apply the first step which is:


Let’s use an example to demonstrate how to customise the Strategic Planning Process

John and Debbie are a young couple, 34 and 28yo. John has a secure job working as a OH&S trainer. Debbie does part time receptionist/admin work and spends a great deal of her time at home supporting their two young children, Fiona (6) and Ben (4).

They bought their first home together in Charlestown just over seven years ago, when they got married. They have decided that they would like to buy their first investment property, but are just not sure where to start.

Now let’s take them through the progress to customise the strategic planning process to determine their desired future state.

Step 1 – Set Goal

What is the purpose of the investment property? Is it to create cash flow (i.e. either add to or replace income) or is it designed to create a chunk of cash (i.e. extra equity to improve their net wealth position)

In our couple’s example, John and Debbie would like to purchase a residential property to help pay for the children’s higher education. The purpose of the investment property is therefore, to supplement their current income.

They would prefer it located in their local area, as they would like to be able to keep an eye on it.

Also, both John ad Debbie love watching the TV shows about making money from renovation and would love to give it a go!

 Now that we have a clearer understanding on their goals we can move to the next which is…


Step 2 – Review Existing Position

When looking at your current position some things to consider here include the available time you have to work on your investing, your available finances to fund the project or purchase, and the current skills you can apply to the purchase and investment process –  all in conjunction with your personal goals.

For John and Debbie – In analysing their current position, it would be ideal that the property provides for immediate positive cash flow on purchase (think putting money away for Uni) but it would be great if it also had strong growth potential too. (think after the kids have left home). 

They currently have a small amount of savings that could be used for a purchase and/or renovation but they believe that they couldn’t afford to buy an investment property at this stage.

So we review the position with a specialist mortgage broker to be certain. After reviewing their position with them, as their house in Macquarie Hills  has increased in value since they purchased it 7 years ago, it was identified that they had a very strong equity position.

This means that they will be able to use some of this money towards the new property purchase, and the rent from the property will help to pay the mortgage.

And with the property being cash flow positive, it will actually ADD to their income and not cost them any money each week.  (unlike negative gearing – but that’s another story!!)

Now that we have discovered that they can afford to make a purchase, we can now:


Step 3 – Decide Your Strategy

Deciding the most suitable real estate strategy for many can be overwhelming.  And rightly so.

Think about it for a moment. There are so many areas in Real Estate that you can invest in. Just some you could consider include:- buying commercial office space, industrial sites, retail shop fronts, wholesaling, purchasing raw land, farm investing, single residential home, duplex or multi-residential property’s, apartment blocks, strata titling, or even managing a mobile home, caravan park, student accommodation, hotel, motels the list goes on and on.

And then you’ve got to consider the exact strategy to apply to be investment area you chose.

Some strategies to think about here include: Do you buy and hold the project? or sell some (or all) of it when you are done? Or do you want a strategy where you have time to be more actively involved?  Would you like to buy vacant land and build a new home? Perhaps you want to renovate and sell? or consider short or long term leasing? new construction? subdivision? or… and again the list goes on and on!

With so many options and considerations to make, it’s no wonder that people get so overwhelmed!

So, the easiest way that I have found to help with overwhelm is simply…

Decide on One Area that suits you.

And choose One Strategy to work in.

And have One Short Term Goal.

This Will Give You FOCUS

Let’s come back to John and Debbie. Their personal experience with real estate includes both having rented previously and they have also purchased their first home together.

They have decided they prefer to start with something familiar to them so that means residential real estate. Experience in this area will expand and build on their current knowledge.

As the purpose of the investment is to supplement their income, they will want to hold the project. They will also need to find a project or property that covers all of its expenses to keep it (think mortgage and maintenance) and then have some money left over to add to their bank account each month for the kid’s education.

They both love watching the renovation shows on TV, but realise that with John working full time, this means Debbie would be the one responsible for making the renovation come together. As she is not qualified in a trade, she would need to employ tradies to do the work for her project. Debbie is good with admin but will need to consider the impacts to the family time in doing something like this, and also the costs involved to employ the necessary trades people. 

Once John and Debbie have determined what is most important to them and their personal situation, they will have a clear focus and can move onto the next step which is:

Step 4 – Implement Strategy


This is where the proverbial rubber hits the road.

No more time for planning and thinking – it’s time for ACTION. At this point you must implement the chosen strategy for success.

You need to ACT NOW!

But you may be thinking… But I don’t know what makes a good real estate investment! I don’t know how to select the best property to buy! Or I don’t know anything about negotiating! Or I don’t know how to _________! (insert your reason here)

Your inner voice may be yelling STOP! You don’t know enough about this type of investing, or you don’t have experience doing this project or whatever.

And this is a good thing.

In fact, I believe this caution it is a great thing!

Your inner voice of reason is telling you to get more information so that you are confident before proceeding.

And this is exactly what you need to do – before you jump into any investment (whether in real estate or another area).

When you want to capitalise on real estate investments, you need to be able to answer a number of questions about that investment – before you buy into it!

You want to be certain that it is going to achieve your desired end result.

In every strategy (no matter which one you choose) you need to know the following (as a minimum) :

  1. What is the projected Return on Investment (ROI)
  2. What is the Opportunity Cost of completing this deal or transaction?
  3. What is the micro-market Supply and Demand situation of this type of project or property?
  4. Do the Financial Due Diligence numbers stack up for the time it will take to complete the project and finally,
  5. Does it fit well with your Strategic Plan?

You must do the necessary research and analysis on the property or project before you buy.

This is so critical – Let me say that again.

You MUST DO The Necessary Research And Analysis  On The Property Or Project

Before You Buy!

Once you are comfortable that the purchase is sound, then and only then, you would proceed.

You may also need to learn some other skills necessary for your chosen strategy. And with today’s technology, you can do this easily and in a number of ways.

Whatever it is that you don’t currently know – now is the time to learn.

Do whatever it takes – research blogs or forums online, read relevant books or magazines on the topic, complete training courses, attend seminar or webinars or get a personal coach to guide you through the process.

TIP – If you do get a coach, remember to find somebody who has already achieved your desired end result and done what you want to do.

Do whatever it takes for you to educate yourself but remember you must… Start!

And then, after you have implemented your chosen strategy, the final step of the Strategic Planning Process is

Step 5 -Evaluate Success


At this point, consider the following questions to help your review.

  • What worked well within the project?
  • What would you do differently in the next project?
  • How can you improve the process?
  • Was the return on investment sufficient for the time put in
  • What skills have you learned or need to learn?
  • Would you consider this type of project again?
  • What is your next Strategic Step from your new current state?

If you have enjoyed the project and it has brought you success, you may want to do it again. Simply rinse and repeat to build your portfolio!

So there you have it. The 5 Strategic Planning Steps to Building Wealth using Real Estate so that you can use your investment to create a lifestyle you want (or simply help to pay for the kids Uni!)

The next event to share these property strategies will be held at Insight Wealth Planning, 24 Alma Road New Lambton on Tuesday 30th May 2017. This event is strictly limited to 12 guests. To book your spot visit click here.



Picture4Article by Janene O’Connor

Janene has 13 years’ experience in the Banking and Finance industry and has been investing in real estate since she was 23yo. She went full time into residential real estate in 2000 – initially as a sales person and then became the business owner of 3 successful real estate offices on the Central Coast.

She lived the single parent life after having been widowed in 2005. After 8 years, she re-married and then built up their property portfolio (in only 3 years), for her and her husband to retire on.

While living off the income from her portfolio, Janene now devotes her spare time to helping others to achieve financial freedom though the use of residential real estate investing.