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Creating a property portfolio is designed to help create a quicker way of growing your wealth than that of just owning a couple of properties. To achieve this you do need to spend time and research and most importantly to have a financial goal.

There are many schemes and solutions which have been created to assist investors obtain a portfolio of properties. Many of these schemes can seem very practical and make sense but many do not offer any form of an exit strategy which will allow you benefit from all your effort and time.

We all hear of software systems and seminars which are designed to offer methods and ways to acquire property to your portfolio of a certain value quickly. How will these methods help you to exceed your income and allow you financially secure and not need to work?

If you just have a large portfolio with hundreds of properties with high values they could simply just mean you have very high debts leaving you unable to achieve your financial goal.

When putting together a property portfolio it should not be a case of becoming wealthy overnight. A property portfolio should be about creating an asset which will provide you with a lifestyle you can enjoy. An investor must have a reasonable expectation about what a portfolio can offer them with realistic strategies.

An end goal which is definite is one of the most important things an investor can have. Setting goals like owning twenty five properties or setting certain spend on properties over the next five years can mean nothing.

There are many investors who can say they own twenty five properties but they all tend to have high debts and this takes away all the income made. This proves that having a large portfolio is useless unless it returns enough profit to help the investor retire.

Any investor must set a financial goal which will help to identify a point at which he/she can either- leave work, change jobs or by benefit their lifestyle.

To achieve this they must firstly know how many properties including the values they will need to own to reach their final financial goal, working backwards from this will help the investor to work out the time line which is required to achieve their goal.

For anyone who is retired the investment must be stable and have the potential to return on the capital this will work out to be around 5%.

Currently the cash rate is near this figure. Many deposits do provide a return which is in the 5% area. Any investments made in this area would not show any capital growth though and the 5% would be an income only. This shows that the average property will return on average 5% of its value in rent each year. When looking at properties in larger cities they will provide less and properties in regional areas will provide more. With these two things taken into account it would be reasonable to assume that a 5% return can be made of your investments when you determine your retirement income.

It may be a decision you make that at some point that you will be able to retire using debt to buy property, this is as long as your borrowing capacity will allow. When you have retired you will sell the properties you own and repay off the debts and then invest the profit made or you will just keep the property with the debt.

Because your portfolio’s value should have increased, the differences in the values at the time and your debts will represent what you own.

The 5% return of rent on the portion which you own will become your income. When you formulate your own financial goal you must first take into consideration how much income you will need to retire with comfortably.
www.telegraph.co.uk/property/main.jhtml?xml=/property/2007/10/13/opinvest113.xml