Jul 22nd, 2025

Three-Year Investment Property Plan for Tanya: Scaling from Zero to Three Homes

Rapid Path to Three Rental Properties in Three Years

Tanya is a self-employed tutor and single mother in Torquay, VIC, determined to build a three-property portfolio within 36 months. This strategic roadmap shows how she can progress from zero holdings to three investment assets—preserving her lifestyle and minimising risk.

Year 1: Foundation and First Purchase

  • Income growth: Scale tutoring earnings to $150,000 and add a $50,000 part-time role (total $200,000 gross).
  • Debt cleanup: Settle a $20,000 ATO bill using $15,000 in savings plus $5,000 from business cash flow.
  • Loan optimisation: Convert her owner-occupied mortgage to interest-only, freeing up about $775 per month.
  • Investment buy: Acquire a $700,000 property with $140,000 equity deposit, and claim $12,750 in depreciation.
  • Cashflow result: Net positive after-tax yield of ~$1,740 per year, while borrowing capacity remains strong.

Year 2: Expansion with a Second Asset

  • Equity drawdown: Use remaining home equity and fresh savings to trim the PPOR loan and boost DTI headroom.
  • Second purchase: Secure a $721,000 investment, supported by rental growth and a 3% pay rise.
  • Tax strategies: Leverage depreciation and negative gearing for ~ $1,572 in annual surplus.
  • Debt discipline: Keep total borrowings under 6× gross income by managing PPOR debt and maximising write-offs.

Year 3: Recycle Capital & Final Acquisition

  • Home sale: Sell the PPOR for ~ $985,000, then downsize into a $700,000 residence.
  • Capital recycling: Deploy $850,000+ net proceeds to pay down Property 1’s debt and fund the third deposit.
  • Third property: Buy a $742,000 asset, backed by $212,000 total income and generating a $7,000+ monthly buffer.
  • After-tax surplus: Approximately $1,356 per year from depreciation and rental income.

Portfolio Summary (End of Year 3)

  • Total properties: Three investments + one downsized PPOR
  • Aggregate debt: $1.73 million (within lender limits)
  • Annual post-tax cashflow: $37,712 surplus (incl. depreciation refunds)
  • Net equity: Over $1.2 million

Key Takeaways

  • Equity leverage: Tapping home equity fuels growth.
  • Depreciation: Significant tax deductions bolster cashflow.
  • Loan structuring: Interest-only facilities and DTI management keep repayments manageable.
  • Steady surplus: Maintains >$6K monthly buffer throughout.

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