Rise High Investor Weekly Videos #12 – How to retire on Buy and Hold Strategy



1. Acquisition: Building the Foundation

The journey begins with the acquisition stage, where the focus is on purchasing investment-grade properties. This is the time to be proactive and strategic, buying as many quality properties as possible while ensuring they fit into a long-term plan.

It’s important to manage cash flow carefully, taking into account potential changes like rising interest rates or fluctuating income. Working closely with a mortgage broker is crucial to maximize borrowing capacity, while consulting an accountant helps ensure the ownership structures are set up correctly. During this phase, debt will grow, but it should be seen as a tool to build a strong foundation for the future.

2. Development: Adding Value

As the portfolio grows, the development stage focuses on maximizing the value of the properties already acquired. This may involve renovations to improve rental returns or equity, or even exploring subdivision or development opportunities if the land has potential.

This stage often overlaps with acquisition, as investors may continue to purchase properties while making improvements to others. The aim here is to increase the value of the portfolio without proportionally increasing debt, thereby lowering the loan-to-value ratio (LVR). Even simple cosmetic renovations can have a significant impact, both on rental income and overall equity.

3. Consolidation: Reducing Debt

Once enough properties have been acquired, the consolidation stage begins. At this point, the focus shifts to reducing debt and improving financial stability. This is the stage where the investor works toward lowering the LVR to around 50%, ensuring that the portfolio is sustainable in the long term.

Non-income-producing debts, like credit cards, personal loans, and car loans, are tackled first, followed by the home loan. Over time, attention turns to reducing investment property debt, which strengthens the financial foundation and prepares the portfolio for the final stage.

4. Enjoyment: Reaping the Rewards

The enjoyment stage is where all the hard work pays off. With a well-structured portfolio and low LVR (ideally around 20%), rental income can comfortably cover expenses and provide a reliable income.

For long-term investors, property values may have naturally risen enough over time to reduce the LVR significantly. For others, achieving this balance might involve selling a few properties to reduce overall debt. At this stage, financial independence is within reach, offering the freedom to choose whether to work or retire, knowing the portfolio can support the desired lifestyle.