Start with a $350,000 unit, not a house: building a portfolio in 2026

Building a property portfolio in 2026 has become harder amid higher borrowing costs and tighter lending, but LEVR founder Josh Crealy said investors do not need a large deposit or an expensive house to get started.

Crealy said opportunities still exist for those willing to look beyond Australia's most expensive markets and focus on affordable properties with manageable holding costs.

Getting the first purchase right, though, takes more than finding something with growth potential. Investors need a clear and realistic goal, an understanding of their borrowing capacity, the right ownership structure, and an asset that will not block the next purchase.

Work backwards from your borrowing capacity

The first step is establishing how much you can actually borrow, then working backwards from your long-term goals.

“The number one point is just starting to work out where your borrowing capacity is, and work backwards from there,” Crealy said.

He said investors also need to decide what the portfolio is for, whether that is passive income or paying off a dream home. The first purchase needs to leave room for future investments rather than stretching to the most expensive property available.

Get the advice before you buy, not after

Crealy said investors should team up with a specialised broker and accountant to choose suitable ownership structures and avoid limiting future borrowing capacity.

He advised finding professionals who have invested themselves and helped clients build portfolios, rather than relying on advice from people unfamiliar with the process.

“The very first property I bought was in a trust, and then the first 13 were a mixture of trusts and companies,” he said.

The right structure depends on individual circumstances, which is why the advice needs to come before the purchase, not after lending options have narrowed.

Look beyond houses to affordable units

Houses have historically delivered higher capital gains than units, but Crealy said they also carry higher holding costs and can limit borrowing power.

He said established units make sense for first-time investors, particularly in older buildings without lifts or basements, which carry lower owners corporation fees.

“If you go and just buy a house that's negative 30 grand and you're maximising your borrowing capacity, you're just really just, you're getting stuck straight away,” he said.

In Melbourne, he said a one-bedroom unit priced at about $350,000 could rent for $450 a week and come close to neutral gearing.

“Cash flow's become more and more important,” he said.

Follow the cycle, not the headlines

Crealy said investors need to look past recent price growth and assess supply, demand and affordability in individual markets.

He pointed to population growth, declining construction supply and affordability in Australia's two largest cities.

“I do think there is some great opportunities for growth in the next five years, in particular in Melbourne and I think Sydney over the next 10 years,” he said.

He warned against assuming every property in a growing market will perform. Investors need to assess the conditions affecting their chosen suburb and price bracket.

Calculate the real holding cost

Crealy said investors need to account for stamp duty, legal fees, inspections, insurance, rates, land tax, owners corporation fees and interest, rather than focusing only on the deposit.

He outlined a $245,000 unit purchase that required $61,770 upfront with a 20 per cent deposit. Annual non-interest expenses totalled about $5,300, while the existing tenant paid $320 a week, below the estimated market rent of $380.

With an interest-only loan at 6.5 per cent, the property ran at a shortfall of about $1,400 a year at the existing rent. Crealy said the example shows why investors should run the numbers before buying instead of relying on future rent increases to make an investment viable.

Use equity, but keep a buffer

Equity can fund another deposit without having to save the full amount again. Crealy cited a property bought for $245,000 that later received a bank valuation of $390,000, allowing the owner to refinance to an 80 per cent loan-to-value ratio and borrow $312,000.

He warned against repeatedly releasing equity without keeping cash in reserve.

“What I do is I like to leave a buffer. So if I pull money out from equity, I put some aside and keep building the buffer. The more the debt goes up, the bigger the buffer gets,” he said.

Tighter lending and changing tax rules

Crealy said recent changes to negative gearing have prompted some investors to reconsider their strategies, while lending policies continue to affect how quickly they can expand.

Some lenders will consider an accountant's letter confirming an entity is self-servicing, potentially helping investors secure finance for another purchase.

“Banks are making it harder, but there are some that still do it,” he said.

He said investors cannot assume every lender will assess their circumstances the same way, and that understanding the tax and lending implications of each purchase is essential before committing to a strategy.

Start boring

Crealy said investors are better off starting with manageable assets and building over time. He experimented with other investments and development opportunities before returning to affordable properties.

“I think patience is a big thing. Just start with like boring things,” he said.

Understanding market cycles was one of the biggest lessons from his own investing, he said, but not every property will perform. For new investors, the focus should be on making considered purchases and avoiding unnecessary risk rather than trying to get rich quickly.