What is a Foundational Portfolio?

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If you have been immersing yourself in the world of property investment for some time, you would have most likely come across many schools of thought. A Google search of the terms ‘how to invest in property’ comes back with a whopping 383,000,000 results.

Some property investors believe the best strategy is to buy and flip. Others will say that you should focus on cash flow, and some like to bet on capital growth.

The reality is that property is not a “Get rich quick” scheme. Succeeding in the world of real estate requires commitment, patience, and strategic thinking. Your first goal as a property investor should be to establish a robust foundation portfolio from where you can grow wealth.

Read more: How to invest in property

What is a foundation portfolio?

A foundation portfolio is a group of complementary properties that work together to create a solid foundation from where you can build a more diverse portfolio.

The idea behind a foundation portfolio is that it will grow over time and will allow investors to get a solid start towards creating financial security.

A foundation portfolio doesn’t hinder into the investor’s lifestyle as it does not require funds to be put into it.

While every property investor is different, a foundation portfolio will often consist of around 10 to 20 properties. This number will vary depending on your personal needs and what you are trying to achieve.

Read more: how much can I borrow for an investment property?

How to invest in property in a safe way: choosing the right properties for your foundation portfolio

The first step towards building your foundation portfolio is to get the strategy right. Having a long term strategy is essential to succeed and stay focused on your investing goals.

Going through a thorough planning process will also help you figure out how many properties you will need and the order in which to buy them. As you grow your portfolio, you will need to refer back to this strategy and ensure that every purchase is in line with what you are wanting to achieve.

Properties within a foundation portfolio need to have good fundamentals in place:


They are close to employment centres, within an area that has historically good capital gains and is experiencing steady population growth. The area must have a diverse range of industries driving the economy, and not rely solely on one industry such as tourism or mining for example. Ticking these boxes means that there will always be a steady demand from renters and buyers, which will minimize the investment risk. Properties should also be within easy access to public transport, schools, shopping facilities, and other amenities.

Positive to neutral cash flow

The properties in your foundation portfolio should have a neutral to positive cash flow.

Positive to neutral cash flow

Priced under market value

Buying a property below market value or comparable sales means that you can build equity sooner.

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Tips for setting a sound foundation portfolio

Get a mentor

From athletes to entrepreneurs, many high-performers attribute their accomplishments to the guidance of their mentors. This also applies to property investment – you should learn from the people who have done it before you.

It might not be necessary to arrange an in-person meeting, as you can find a wealth of resources online including podcasts, youtube channels, and blogs. Some property investment mentors also offer webinars or online one-on-one coaching sessions.

Be resilient

Being a property investor has its challenges. A lot of the time you need to go against public opinion. You need to remain calm as the market slows down and you are bombarded with sensationalist headlines. You need to learn new skills and step away from your comfort zone.

Remember that property investment is a long-term game. You need to be mentally prepared to ride the ups and downs of the journey.

Gather the team

To succeed in property investment you need to surround yourself with the right people. Having the right team can be the difference between achieving your goals and not.

This will include your professional team, such as accountants, property managers, lawyers, financial advisors, and accountants, but you should also socially surround yourself with people that will encourage your goals and won’t bring you down. Overcoming self-doubt and taking action is one of the biggest obstacles you will need to overcome to become a property investor.

After the foundations are set

Once you have created a good amount of equity, you can start thinking about consolidating your portfolio by paying down debt. You might be able to create enough passive income to live a comfortable lifestyle.

Alternatively, you can use your equity to take on more challenging investments, which can include subdivisions, land development, building townhouses, commercial real estate and so on.

Staying focused on your strategy and financial goals will help you identify when you can start building on top of your well-set foundations.

How much can I borrow – mortgage advice:
As you enter the world of property investing you will have a lot of questions: How much deposit do I need for a house? How much can I borrow for an investment property? What is the best way to structure my investment loan?

With Property Market Investor you can talk to a mortgage broker free of charge. For personalised advice, simply fill out a form and talk to a home loan expert to answer all your questions

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