You’ve worked hard to secure your first investment property. But now, you’re at a crossroads:
Do you build equity and focus on a single high-value property, or leverage your position to start growing a multi-property portfolio?
For families who value legacy, wealth-building, and financial security, this decision is about more than numbers. It’s about choosing the right path to align with your family’s long-term goals.
Here’s a breakdown of how single-investment property and multi-investment property ownership stack up—and which strategy might work best for your family.
Financial Growth: One Big Asset or Many Smaller Ones?
Single Investment Property Ownership
Owning one high-value investment property can provide steady, predictable growth without the complexity of managing multiple assets.
Pros:
- Equity Growth: With a single investment property, it’s easier to focus on building equity over time. For example, a $1.2 million property appreciating by 5% annually adds $60,000 in equity each year.
- Lower Costs: Maintenance, management fees, and financing costs are limited to one property, simplifying your finances.
- Emotional Stability: Families often feel more secure knowing their wealth is consolidated in one robust asset.
Cons:
- Limited Diversification: Your financial future depends entirely on the performance of one market. If property values dip in your area, your entire portfolio is at risk.
- Missed Opportunities: Equity in a single property may grow, but it isn’t actively working for you unless you leverage it.
Multi-Investment Property Ownership
Expanding into multiple properties diversifies your investment, creating more income streams and long-term growth potential.
Pros:
- Diversification: Owning properties across different markets reduces risk. For instance, rental demand in regional areas may remain strong even if metro markets soften.
- Higher Rental Income: A portfolio of smaller properties can collectively generate more income than one large asset.
- Tax Benefits: Investors with multiple properties can take advantage of negative gearing and depreciation to offset costs.
- Retirement Strategy: By holding properties in a Self-Managed Super Fund (SMSF), you could pay 0% Capital Gains Tax (CGT) if the fund is in the pension phase. This could save $90,000–$117,500 on a $250,000 capital gain.
Cons:
- Complex Management: Managing multiple properties requires time, effort, and often professional property management services.
- Financing Hurdles: Securing loans for additional properties can become more challenging as your debt-to-income ratio changes.
- Higher Initial Costs: Scaling into a multi-property portfolio requires access to equity, strong cash flow, and a strategic loan structure.
2. Who Benefits Most From Each Strategy?
Single Property Owners
This approach suits families who:
- Prioritise stability and simplicity.
- Want to reduce risk by focusing on one high-value asset.
- Have long-term goals for consistent growth without the stress of managing multiple investments.
If your family values security and prefers a hands-off investment, owning one property could align with your goals.
Multi-Property Owners
A multi-property strategy works best for families who:
- Want to maximise wealth-building potential through diversification.
- Are willing to actively manage their portfolio or hire professionals to do so.
- Have a strong cash flow and access to equity to fund additional purchases.
For example, less than 1% of Australian investors own six or more properties, but those who do often enjoy higher rental income and greater tax advantages.
Tax Implications: The Game-Changer
One of the most significant factors in your decision is tax efficiency, especially if you plan to use an SMSF:
Single Property in Personal Ownership
- Capital Gains Tax (CGT): When you sell, you’ll pay CGT on 50% of your profit at your marginal tax rate. On a $250,000 gain, this could cost $90,000–$117,500.
Multi-Property Portfolio in an SMSF
- 0% CGT in Pension Phase: If your SMSF is in pension phase, you won’t pay any CGT on the sale of properties.
- Rental Income Tax Advantages: Rental income is taxed at just 15% while the SMSF is in the accumulation phase, dropping to 0% in the pension phase.
This makes multi-property ownership within an SMSF a powerful tool for families aiming to build generational wealth.
The Legacy Factor: What’s Best for Your Family?
Single Property
If your goal is to pass down a high-value, low-maintenance asset, a single property may be the best choice. Your family inherits a simplified financial situation with fewer responsibilities.
Multi-Property
Owning multiple properties gives you the flexibility to provide for each family member individually. Imagine leaving an income-generating asset to each of your children, offering them both financial stability and a foundation to build their own wealth.
The Verdict: What’s Right for You?
The choice between single-property and multi-property ownership ultimately depends on your family’s:
- Goals: Are you focused on stability or growth?
- Finances: Do you have the cash flow and equity to scale?
- Involvement: Do you want a hands-off investment or an active role in wealth-building?
Both strategies have the potential to support your family’s long-term goals, but multi-property ownership—especially through an SMSF—offers unparalleled advantages for families looking to maximise wealth and tax efficiency.
Your family’s financial future is too important to leave to chance. Whether you choose to focus on one high-value property or scale into a diversified portfolio, the key is having a plan that aligns with your goals.
Ready to take the next step?
Let us help you create a tailored property strategy that builds security and opportunity for your family’s future.
Contact Pinpoint Finance today for personalised advice on your next property move.