$1m on a lower income – how to do it, for real


Property investing is here to make millionaires of us all. That’s what an increasing number of seminars and marketing materials would have us believe. 

The self-professed property gurus tell us it’s easy. You simply save up some money, plug it into a bunch of properties and sit back as your net worth reaches seven digits. They know because they did it themselves – and you can too, if you’d just buy their 24-pack DVD set and pick up a lifetime subscription to their website. 

Upon closer inspection, you realise that their investing models rely on an increasingly outlandish series of ifs and buts – if interest rates don’t go up, if your credit card debt miraculously disappears, if that Nigerian prince spamming your email really does need to deposit $5 m into your bank account. 

With the ever increasing amount of investment information out there – good and bad – Your Investment Property decided to test an ambitious property investment target to see if really was possible. 

We took a fictional couple with a very average income, and a lower level of savings, and asked the question: could they make a million dollars in 10 years through property investing? 

We posed the question to three highly regarded property experts – real investors, who’ve made real money in a real economy – to see what sort of strategy they could come up with to reach this goal. They were Margaret Lomas of Destiny Group, Brendan Kelly of RESULTS Mentoring and Ben Kingsley of Empower Wealth. 

Each has developed different investment strategies, detailing what type of properties to buy, where to buy them and how they should be purchased. It is a difficult target. Let the strategising begin! 

The investor

To guide our experts, we’ve created a profile of our investor as being a married couple who: 

  • earn a combined income of $90,000
  • have $50,000 in savings
  • have no outstanding debts
  • ideally don’t want to go above a 90% LVR
  • own no property
  • are paying $400 rent per week
  • have no dependents


PART 1: Ben Kingsley’s plan


Ben Kingsley, Empower Wealth: Ben is the founding director of Empower Wealth. He has close to 20 years of experience in purchasing residential property and has built up a multi-million dollar property portfolio.

The way we approach any planning is by starting with an end goal in mind. In this case it is to have a million dollars in net equity within 10 years. I don’t think this will be possible without the couple making an extremely detailed month-to-month plan that incorporates sophisticated cash flow and equity modelling. Although they are novices, they will need the ability to get the numbers right, thoroughly research areas and be familiar with the common growth drivers of property value.

Considering the yearly income of this couple and their savings, what we’ve developed is a very aggressive strategy. Every step will require certain processes and cash in the bank at a specific timeframe. This is where I think the strategy will differ from what most novices do. They normally tend to buy a property, see how it goes and then decide on whether they will buy another one. They don’t have an end goal in mind, and they don’t forecast what steps are necessary to achieve their goal as they go about their investing from year to year.

This is why the first step we are going to take is building from the end objective to get an achievable model. I think its important at this stage to realise that to meet their end goal, this couple is going to have to sacrifice a high or even a medium standard of living as they pursue their wealth creation goal. They will have to be ultra-diligent in managing their living expenses. 

The strategy

The first step in this strategy is to buy a $500,000 property off a 95% LVR. Of course, in getting this loan for an investment property, they are going to be heavily scrutinized by a lender, and will need to have a squeaky clean credit rating. However, this first loan will be very crucial in making the rest of their strategy work. 

The first purchase would need to be a high yield, high capital growth property. The numbers are what’s most important here: the property would need to secure a 10% rental yield and be assured of getting 7% annual capital growth. 

After 12 months, with this property cash flow positive, the strategy will then see the couple using the savings acquired from their cash flow to purchase their second property. This would be a $250,000 property, again with 7% capital growth, but the yield would only need to be 7%. They’re going for a lower cost property for this purchase, because no equity will be released off the first property. They are relying purely on the savings they’ve built up.

The couple would then hold tight and wait for 18 months before buying their third property. They’d be going for a $400,000 property, accessed off a 90% LVR. This will be purchased with both cash flow and equity from both the first and second property. 

Provided they have continued to buy cash flow positive properties with high capital growth, the couple would be in a position to buy a fourth property valued around $350,000 in another 18 months. This time, the LVR would only need to be at 80%, because they would be able to release a lot more equity from their other investments.

The approach is balanced between cash flow and capital gains. It recognises that rent assists with payments, but that capital growth is the engine behind portfolio growth. 


Position after 10 years

Value of properties


Debt at this point


Net worth


 The property selection

The couple could start with a 3-bedroom house with an upgraded kitchen and bathroom in Dysart, Qld. Dysart is one of several mining driven housing markets within central Qld.It is known for having a spectacular rental market, with the average rental yield close to 14%, according to RP Data figures. There is also a strikingly low rental vacancy rate of 0.2%. What’s more, mining projects are expected to continue in the area for at least the next 20 years. Other options for the first house that have a similar property market include Queensland mining towns Moranbah and Middlemount. 

The second property

By the time this couple is ready to take on their second investment property or any subsequent properties, I would probably change the locations according to market movements. But for the sake of this exercise, I would select an established home in either Rockhampton or Yeppoon as a viable option for the second property. 

The third and fourth property

The third property will see us spreading the couple’s risk and diversifying their portfolio somewhat. I’d like to see them picking up a house in a WA mining town. Kalgoorlie would be a good option. The fourth property would see them diversifying even further – this time with a unit close to the CBD of a prominent regional centre, such as Parramatta

Growth projections



Capital growth

Month purchased

Value (today’s $)

Value (at purchase)

Value after 10 years

Property 1


0 months




Property 2


12 months




Property 3


30 months




Property 4


48 months












Forecast Assumptions







Asset Growth Rate :







Initial Rental Yield :







Rental Growth Rate :








Occupancy Rate :


on all properties





Management Expenses :


of rent,





Maintenance Expenses :


of property value (pa)




Maintenance Growth Rate :







Purchase Expenses :


of purchase price




Selling Expenses :


of sale price




Mortgage Interest Rate :







Line of Credit Interest Rate :







Mortgage Term :










Disagree with Ben’s strategy? Read Margaret Lomas and Brendan Kelly’s strategies in part 2 of this feature, or grab a subscription to Your Investment Property magazine to read the entire article.

With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now

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  • Steve G says on 15/03/2012 02:29:07 PM

    OK sounds nice and easy.
    Now lets do the same exercise on a more realistic scenario:
    - married couple with children and no savings;
    - have plenty of outstanding debt;
    - bank owns my home.

  • Irene L says on 15/03/2012 04:21:29 PM

    this gets me excited! what a useful article! I will compare this with the circumstance that I am in. Can't wait to read Margaret and Brendan's strategies.

  • Skeptical says on 15/03/2012 07:06:41 PM

    I think you are living in a utopia where there are cheap property mgmt fees (7.7% is very very cheap). Also, this couple has to be extremely lucky to have no major financial requirements during that 10 year period. Is there an emergency fund? What if they don't have any tenants for a period? And no dependents right now -- maybe in 5 years? What if it is an unexpected pregnancy? Wow, you have really got this couple's hopes up! I would be advising this with HUGE HIGHLIGHTED paragraphs saying this is possible if there are no hiccups during your 10 years -- and nothing ever does. Dream on! I think it was possible for someone 20 years ago to have the average salary and achieve this when prices were really low. I am looking for an investment property in Perth and cannot find anything that I can rent out immediately (kitchen and bathroom not needing upgrades) for under $400K 20 kms around the city -- new houses 50kms away are $400K so good luck getting these properties in QLD.

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