How Can Doctors Build A Property Portfolio?

Is property a good investment for doctors? 

Investing in real estate has many benefits: 

  • For doctors, obtaining finance for property investment can be much easier than it is for other borrowers.
  • It has the potential to produce capital growth and rental yield. The power of compounding returns means property investment can be a good investment.  
  • It typically generates robust long term returns. 
  • It helps to build equity as the property value appreciates. You can use the equity to invest in other properties. 
  • You can often borrow the entire costs associated with investing in property. 
  • Negative gearing benefits. 
  • It is an excellent retirement nest egg.
  • You can manage your cash flow through rental income. 
  • It’s easier to understand than other investment opportunities. 

However, investing in property is not without risks: 

  • The property market will go through cycles, and it may not always generate the return you expect. However, it is not as volatile as the share market. 
  • Property investment requires many thousands of dollars.

Why are doctors interested in building a property portfolio? 

  • Tax savings is just the icing on the cake. 
  • Since you’re considered a low-risk borrower, lenders waive lenders mortgage insurance, even when you’re borrowing more than 80% of the property value. 
  • You don’t have to save a large deposit, since most lenders offer between 90% to 100% investment loans for most doctors.  
  • Due to the nature of your profession, you’re likely to be more financially secure than other borrowers. 

So, what is a property portfolio? 

It is a collection of investment properties, that is either owned by an individual, a trust or a company. 

Many doctors limit their property purchases to a family home and a holiday home and fail to explore property portfolio opportunities. 

How do I build a property portfolio? 

  • Choosing the right location is important when building a property portfolio. Don’t put all your eggs in one basket. Spread your investments across different areas to increase your chances of capital growth or rental yield each year.
  • If you own a home, use the equity to invest in a second property. It’s good practice to know the ballpark value to ensure the assessor is not undervaluing your home. 
  • Define your investment strategy, whether you want to focus on rental yield or capital growth. As a doctor, you can prioritise a capital growth strategy since you can cover the investment loan cost. 
  • Consider the structure. Do you want to go at it alone, or with a trust or company? 
  • If you’re aiming for a positively geared property, go for rental yield. A positively geared property is one where the rental income is higher than the costs of owning the property. 
  • You can also choose to negatively gear your property as the loss from renting the investment property can be offset against your salary and reduce your total taxable income.
  • Do not cut corners and settle just because you’re time-poor. Take advice from professionals who can help you choose investment-grade properties that can provide rental yield and capital growth. 
  • Be aware that when it comes to off-the-plan investments lenders are more conservative. 
  • Consider putting money in your offset account, so you pay less in interest. Access the money in the offset as a deposit for another property. 
  • Consider a split mortgage – where a certain portion of your investment loan is fixed, and the other is on a variable rate home loan.

How to choose the right location to build a property portfolio? 

  • Look for areas with steady population growthThere should be employment diversification 
  • Research building permit approvals and the vacancy rates to avoid areas with an oversupply of housing. 
  • The rental level trend will indicate how much tenants are willing to pay and can pay.
  • Investigate areas were major infrastructure projects are underway. 

What are the common mistakes when building a property portfolio? 

As first-time property investors, doctors can make the following mistakes: 

  • You do not claim for full tax entitlements related to tax depreciation and negative gearing. 
  • You buy an investment property close to your home, instead of venturing into other areas. 
  • You were swayed by the opinions of your friends and family instead of seeking independent advice. 
  • You overestimated the rental returns. 
  • You chose the wrong loan, i.e. instead of interest only, you decided to pay both the principal and interest. The interest paid on the investment loan is tax-deductible during the interest-only period. 
  • You bought in an area that doesn’t appeal to tenants. 
  • There is an oversupply of property, which leads to low rental income and limited growth rates. 
  • You are selecting your tenant instead of using the help of a qualified property manager. 
  • You bought the property to suit your lifestyle instead of your tenants’ lifestyle. 

A cornerstone of a strong property portfolio is making a good start.  

If you did invest in an underperforming property, sell it fast and learn from the mistakes you made. 

How many properties should I have in my portfolio? 

There is no magic number as to how many properties you must have in your portfolio. 

Try to aim for high-quality properties that will deliver strong growth in the long run and properties that provide passive income. 


Capital growth or rental yield – which one is better?

There’s no right answer, it’s entirely dependent on your investment goals.

That said, investors who already receive a high income tend to focus on capital growth. 

Should I buy a property with my spouse/partner? 

This is a great question to ask your accountant, but if you’re in a relationship, it’s possible for the title of the property to be in both names. 

A joint tenant, where both your names will appear on the property title, is a good option if you are in a similar tax bracket. The income and expenses will be recorded individually on each of your tax returns in equal parts. 

If your spouse/partner is on a lower tax bracket, then it’s a good option to place a positively geared property in his/her name. 

A negatively geared property should be placed in the name of the partner with the higher income as it creates a larger return that aids cashflow. 

I don’t have equity. Can I still build a portfolio? 

If you’re just starting out, your income is lower and you may not have any savings. But it may still be possible to secure a loan for an entry-level investment. While you complete your training and specialisation, you can hold the property and build equity. 

How can we help to build your property portfolio? 

  • Some of our mortgage brokers are seasoned investors who have had experience building a property portfolio. 
  • We have over 50 lenders on our panel, each with varying policies that can cater to your investment goals. 
  • Our mortgage brokers know the lenders’ lending criteria and recommend the right investment loan product that suits your property portfolio needs. 
  • We can assist with the barrage of documentation and application forms you need to fill in. 
  • We will make sure you can meet your settlement deadlines without hassling you during the investment loan process. 
  • We will work out your financial situation and help to maximise your borrowing power. 

Are you planning on building a property empire? Our mortgage brokers can help you on your journey. Call us on 1300 889 743 or enquire online. 

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