Why Most People Feel Lost
I see it all the time. Someone buys a property or two, then stalls. They’re not sure if they should buy more, sell one, renovate, or just sit tight.
The problem isn’t that they’re bad at investing. The problem is they don’t know where they are on the journey.
Property isn’t a straight line. It’s a game with stages. Each stage has its own rules, risks, and best moves. If you don’t know which one you’re in, it’s like trying to play Monopoly without knowing whether you’re still in “Go” or already on “Boardwalk.”
So let me give you the map. These are the four stages every portfolio goes through.
Stage 1: Acquisition
This is where you’re laying the foundations. It’s all about getting the right properties on the board.
Key drivers are simple: saving deposits, maximising borrowing power, and picking quality locations. The trap is rushing in just to “get started” and buying mediocre assets that do nothing for you long term.
Most people start in their personal names. Nothing wrong with that. But if you’re serious about building a multi-property portfolio, it can be worth thinking about structures from day one.
One option is a unit trust with a corporate trustee. Why? Because you still get to use your individual borrowing capacity for finance, but the assets sit in the trust. That gives you more flexibility to add properties later without clogging up your personal name with debt. It’s not for everyone, and you’ll need proper advice, but it can be a smart way to set yourself up.
Stage 2: Growth
This is where things start to get interesting. You’ve got some assets, now it’s about making them work.
Growth happens through three things: time, compounding, and leverage. The more quality assets you hold, the more the market does the heavy lifting.
This is also where manufactured equity comes into play. A renovation, subdivision, or small development can rocket your equity forward instead of waiting a decade.
Structures matter here too. If you set up a unit trust earlier, this is when it starts to show its value. You can keep borrowing in your own name but hold assets in the trust. That means you can keep acquiring without hitting a wall as fast.
The trap here is getting overleveraged with no buffers. Growth is fun until you can’t sleep at night because one interest rate hike wipes you out.
Stage 3: Consolidation
This is the least glamorous stage, but probably the most important. It’s about de-risking.
You’ve had your run. The properties have grown. Now it’s time to trim the fat, reduce debt, and stabilise.
That might mean selling one underperforming property to strengthen the others. It could mean refinancing to better terms, or restructuring loans. It’s also the time to start focusing on net yield rather than just gross growth.
If you’ve been running with a trust structure, this is where it pays dividends. Income can be distributed more flexibly. Planning for succession or even bringing in a joint venture partner is easier if the portfolio isn’t just in your personal name.
The danger here is consolidating too early and choking your growth, or too late and carrying too much risk into retirement. Timing matters.
Stage 4: Harvest
This is the fun part. It’s when the portfolio pays you back.
There are two main paths. You can hold and live off the income, or you can sell some down and pocket the gains.
For many investors, this is also the point where they pivot from residential into commercial. Residential is a brilliant growth engine, but commercial is an income engine. Longer leases, higher net yields, more predictable tenants. Less upside, but far more stability.
If you built your portfolio in a trust, this is where it shines again. The income can be distributed to family members, even into your SMSF, to smooth out the tax hit.
The danger in this stage is hanging onto growth properties too long, hoping for another boom, when what you really need is stable income.
Case Study: Walking Through the Four Stages
Let’s make it real.
Sam is 35 and wants to be financially free by 55.
Stage 1 – Acquisition: He buys his first metro house for $700k in his personal name. Nice and simple start.
Stage 2 – Growth: Two years later, he sets up a unit trust with a corporate trustee and buys a $750k duplex. Two years after that, he does a reno project through the trust, spending $100k and instantly creating $160k equity. Over time, compounding at 7 percent a year grows his three properties to a total portfolio worth around $5m.
Stage 3 – Consolidation: In his mid-40s, Sam sells one underperformer, pays down debt, and brings his LVR back to a safer level. His cashflow improves and the portfolio is less stressful to hold.
Stage 4 – Harvest: At 55, Sam sells his resi portfolio, realises about $5m in equity, and pivots into commercial at a 6 percent net yield. Suddenly, he’s got $300k of stable income a year. Well above the $120k he originally needed.
That’s the map in action.
How to Use This Framework
The whole point of the four stages is to know where you are, so you can plan the right moves.
If you’re in Acquisition, focus on quality assets and think carefully about structures.
If you’re in Growth, balance compounding with cashflow and manufactured equity.
If you’re in Consolidation, cut the weak links and reduce risk.
If you’re in Harvest, plan your pivot into stable income.
It’s not about rushing through the stages. It’s about knowing what the priority is at each point so you don’t get stuck.
Common Mistakes
Buying average properties in Acquisition just to feel “in the game”
Pushing Growth without cashflow buffers
Consolidating too early and killing your momentum
Ignoring Harvest until it’s too late, ending up rich on paper but poor in income
Forgetting that structure can make or break your ability to grow
Reflection
When I look back on my own journey, the big leaps forward weren’t from buying “the right suburb” or timing the market. They came from knowing which stage I was in and focusing on the right lever at the right time.
The property game isn’t about luck. It’s about sequencing.
See you next week
Alex Zarate
Disclaimer
This article is for educational purposes only. It does not constitute financial, legal, or tax advice. Everyone’s circumstances are different. Please seek professional advice before acting.
