When Is It Time to Stop Buying Investment Properties? | FUNdamental Fridays

How do you know when you've bought enough property?

In this Friday Fundamentals episode, Polly Chu is joined by mortgage broker Luke Oxenham to tackle a question from listener Andrew:

"How do you know you're ready to land the plane?"

For many investors, the accumulation phase becomes second nature. The focus is always on the next property, the next equity release, and the next opportunity.

But what happens when you've built the portfolio you need?

Luke and Polly explore why there is no universal number of properties, why borrowing capacity shouldn't determine your investment goals, and how investors can start thinking about debt reduction, passive income and lifestyle by design.

They also unpack:

✅ Why "enough" looks different for every investor
✅ The role of passive income in defining your finish line
✅ Why lenders don't decide when your journey ends
✅ The transition from accumulation to consolidation
✅ Debt reduction strategies as retirement approaches
✅ Balancing wealth creation with actually enjoying life

Because at the end of the day, money is a tool, and investing should help fund the life you want to live.

Got a question or a "hill" you'd like us to unpack? Send it through here 👉 https://thepropertycouch.com.au/topics/

⏱️ Timestamps

00:18 Andrew's question: "When do you land the plane?"
01:29 Why there's no universal finish line
02:20 Why borrowing capacity shouldn't define success
03:19 Working backwards from passive income goals
05:05 Defining your ideal retirement lifestyle
05:44 Accumulation vs debt reduction
06:39 Why paying down debt matters
07:41 Interest-only vs principal-and-interest strategies
09:17 When should investors start enjoying life?
10:15 Money is a tool, not the destination
11:34 Just because the bank says yes...
12:14 Why enough is personal
12:31 Final thoughts

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Transcript

SPEAKER_01 0:00

I don't think that there is a particular thing that says this is the end or this is when we're finished.

SPEAKER_00 0:04

Just because the bank is willing to give you all the money doesn't mean you just need to keep quarrying at the end of the day, money.

SPEAKER_01 0:10

Investing is a way for us to build that passive income to kind of fund that lifestyle by design to do what you want to do.

SPEAKER_00 0:17

Hi

Andrew's question: "When do you land the plane?"

SPEAKER_00 0:18

everyone. Welcome to another Friday Fundamental here on the Property Couch. I'm excited to be on today. My name is Polly Chu, and I'm a qualified property investment advisor. And today I have Luke joining me.

SPEAKER_01 0:30

Hello, hello. And I'm Luke, mortgage broker and one of the couch crew. So this week we've got a question from one of my clients, Andrew. And Andrew's sent a message to me asking us, how do you know you're ready to land the plane? So thinking about when you're at the end or nearing the end of the accumulation phase, how do you know when we've made it in terms of our investment journey? I know Ben talks a lot about uh delayed gratification and you know working towards sort of that end goal, but I think this is a good question around when do we think that we know this is it?

SPEAKER_00 1:04

Yeah, I think it's more like when do we, because I guess as investors, there's a lot of delayed gratification. We probably made some sacrifices along the way, maybe, you know, not go away on some of those holidays in order to bring up the cash flow to buy properties, right? So it's more like, well, when can we, I guess, start to pivot in terms of the mindset and start enjoying a bit more about life, spending those holidays and you know, a bit of shopping, those kind of things. Anything

Why there's no universal finish line

SPEAKER_00 1:29

that comes to mind that you want to flag or talk for some of the things that goes through.

SPEAKER_01 1:35

I think it's a good one, right? Because it's different for everybody. So, you know, some people might have that vision where they say, okay, I want to get those 10 properties. I've got to have that large portfolio that, you know, is earning a certain level of income. You know, some people might be content saying, okay, well, I just want to think about that I've got enough for my family when I retire. Um, and they can be two really different pictures overall, I think. So I think it's really hard to kind of just have a blanket, you know, hey, when your bank tells you that you can't borrow anymore, that's that's the sign. Um, because I don't think that's the case.

SPEAKER_00 2:07

So no, I agree with you, Luke. I think if for me personally, I I wouldn't want the bank to tell me you can't borrow any more money to say that.

SPEAKER_01 2:15

In the current day of age, that seems to be happening all the time at the moment. So um,

Why borrowing capacity shouldn't define success

SPEAKER_01 2:20

like I think a good thing to touch on would be that the way that lending is designed is that you'll naturally just start hitting your ceiling after a certain point. And again, that ceiling is different for everybody, right? So, you know, lenders, particularly off the back of some of the um work that APRA has put forward in February, the big focus at the moment is what they call debt-to-income ratio, which is effectively exactly what it sounds like, uh, where it's a measure of the ratio of debt in an application versus the ratio of income in the application. Now that can be slightly different from lender to lender because not all lenders will take all the income that we've earning per month. Yeah. Um, but genuinely, they've put some harder rules when it comes to having more than six times. So you'll naturally start seeing that, particularly when you get to property two. Yeah. Maybe property three. You know, definitely property three is when it starts sort of popping up. And we need to start thinking about okay, well, how do we sort of have that investment strategy to keep doing what we want

Working backwards from passive income goals

SPEAKER_01 3:19

to do?

SPEAKER_00 3:19

Yeah. I think I look at it a little bit different, similar, I think, is just understanding, you know, how many properties enough, those kind of things. But I always, um, some of the discussions I normally have is always asking clients in terms of, you know, what are you aiming for? Like what is that passive income target where you want to have in 10 years or 20 years or 30 years away? Um, because that dollar value of income basically should cover our spending, right? In retirement, um, the income that you want is always going to be a function of the dollar value of income-producing assets you have at that point in time. So it's under sort of working backwards from there and understanding, hey, what is that X dollar value I need to have to generate the Y income that I need. And then really is between now and then working out how do we buy growth assets to get us that dollar value of portfolio. And of course, here we talk about property ultimately, it's really the power of leverage, trying to supercharge that uh within a time frame that we have to generate that. So, and I think everybody is different. So a passive income for me could be quite different for you and for another client and for my friends or other, you know, community. There's no right or wrong answer there. It's really just working out what do you feel comfortable with, and then working backwards in terms of, hey, have we bought all the properties we need to have to generate that income? And really, once we have, um, because we've now generated that X dollar value of assets and don't forget if we're holding for the long term, it will keep growing as well, right? If we've got time on our side, isn't it?

SPEAKER_01 4:52

And I think I think one of the things that you or probably all of the clients that speak to you have in common is thinking about what that end position looks like. I think that's like I think thinking about, you know, I don't think anyone wants to think about retirement

Defining your ideal retirement lifestyle

SPEAKER_01 5:05

really, but but having that idea of, okay, well, if we get to this age, what does our life look like or what do we want our life to look like? And then I think that can be really powerful when you start planning that to try and bring it back.

SPEAKER_00 5:18

Yeah, it's that reverse engineering piece that I guess we keep talking about in terms of why do we should do think about that long-term strategy, the plan. Um, and really then once you have clarity in terms of what you're aiming for, in terms of today's execution, that will help in terms of, hey, this is enough properties now. Our goal, you know, once we buy all the properties we need is to focus on debt reduction, isn't it?

SPEAKER_01 5:43

It can

Accumulation vs debt reduction

SPEAKER_01 5:44

be, yeah. So, and I think that's pretty common where we've got those sort of two phases, right? We've got the accumulation phase where we're trying to purchase as much as we can and we're pulling equity out, and you've end up with, you know, six or seven loans going everywhere because we're trying to keep everything separated based on purpose. Um, and then, you know, it gets to a stage where we say, okay, well, if we're starting to see that, you know, position where we're getting or we think we might be nearing where that is, then it's all about, you know, trying to reduce our interest rates, reduce our repayments, reduce our total debt, um, and start that window as we kind of work towards retirement as well.

SPEAKER_00 6:17

Yeah, 100%. Because I think the passive income really, especially if property comes uh really that rent, it needs to take away all the outgoings. And most of that expense is the interest cost, um, you know, while we're holding on to the property. So hence debt reduction does need to be, I think, considered as part of this overall conversation because the sooner you get on top of the debt, the more of the rent

Why paying down debt matters

SPEAKER_00 6:39

you get to have. So it's really, I think making sure in terms of accumulating, you do what you need to do, then you then the headspace should be debt reduction. Start to get on top of that lending. Um, and I guess it sort of flows quite well in, you know, you talked about debt to income ratio, being able to continue to refinance, like while you carry a large amount of debt, like continue to refinancing that, I think will it's quite stressful and we need to make sure we can do that.

SPEAKER_01 7:05

Like that there can be a strategy for where you want to do a refinance because it reduces your monthly outgoings. Yeah. But I think on the other side of that, you've got to keep in mind as well that we are extending that loan term. So that total interest cost every single year is going to increase as well.

SPEAKER_00 7:19

Yep.

SPEAKER_01 7:19

That said, when we're accumulating, that we're not too concerned about that, right? We want the capacity to get the next asset.

SPEAKER_00 7:26

Yep.

SPEAKER_01 7:26

More so than, you know, working out the interest. On the other side of that, then that's when we start being like, okay, well, we need to start seeing some of these reduce.

SPEAKER_00 7:34

Yeah.

SPEAKER_01 7:34

Um and I think, you know, we're in a bit of an interesting time at the moment with interest rates where depending on the loans as

Interest-only vs principal-and-interest strategies

SPEAKER_01 7:41

well, and I'm seeing it a little bit with some of my clients, where the investment PI rate on PI might be not hugely different from the investment interest only rate.

SPEAKER_00 7:52

Right.

SPEAKER_01 7:52

Um, depending on the lender as well. So, you know, there can be a bit of a strategy there where we start maybe keeping some of our investing or some of our investment lending on I.O., maybe some of it on PI, and then you start sort of seeing that gradual decline rather than have everything flip over to PI and it just absolutely blows up your offset every month.

SPEAKER_00 8:10

Yeah, 100%. I think it's also that cash flow piece as well, when you do have a carrying, if you're carrying a huge portfolio of IP debt, but you're used to just interest only and you switch the entire thing to PI, cash flows-wise, is quite a bit of a shock, could be. So I really like the idea how you're just talking about staging different loans to Yeah.

SPEAKER_01 8:28

I mean, like no one wants to see an additional like five or six thousand dollars blow up out of their account every single month. So um, so I think having that sort of like tiered approach where we can start maybe reducing some of the debt, you know, particularly if we've got say like owner-occupied debt as well, um, you know, trying to sort of reduce our total lending over time as we can without, you know, suddenly going one way or the other. I think there's a a bit of a happy medium in there.

SPEAKER_00 8:54

Yeah. What about in terms of, I guess, um, you know, your client did talk about um the some of those lifestyle goals. Life is a journey, not a destination. Do you give any advice in terms of, hey, when is the right time to actually enjoy a bit of a lot of it?

SPEAKER_01 9:09

I I I like telling my clients that they, you know, because it's very easy to get that paralysis by analysis where you are like, okay, well, I need to do this

When should investors start enjoying life?

SPEAKER_01 9:17

so my capacity looks like this, or what do I have to do about my per my personal life to get a better loan? And it's like, well, I think it should be the other way where you should live your life and then we'll find lending to match, not trying to kind of change your life to somehow get the capacity that you need.

SPEAKER_00 9:33

Yeah. So you just focus on, I guess, the lifestyle by design piece. Yeah.

SPEAKER_01 9:38

I'm a big fan of, you know, because you know, if you're getting older, the last thing you want to do like is think back about things that you maybe should have done. And, you know, yes, it might might have been good purchasing a different type of property 15 years ago, but I think having those, you know, family moments or, you know, thinking about the things that actually matter or the reason why we're sort of building that wealth, that's that's huge, right?

SPEAKER_00 10:00

Yeah. I mean, I resonate a lot with that. Um, I do value um, you know, financial freedom for me means being able to, I guess, take the holidays I want to do, take the time off and spend it with family, those kind of things as well.

Money is a tool, not the destination

SPEAKER_00 10:15

And and for me, they're priceless.

SPEAKER_01 10:18

Yeah, like at the end of the day, money's a tool. Yeah. And investing is a way for us to build that passive income to kind of fund that lifestyle by design to do what you want to do. So, you know, I think it can be very easy to get wrapped up in trying to expand that and not actually enjoying why we're doing everything in the first place.

SPEAKER_00 10:36

Yeah, yeah. I f I think I could certainly resonate with that. I think I'm at my own personal journey buying properties. I'm always thinking about, you know, for certainly in the beginning part of my accumulation journey, I need another property. But really, it's just taking a step back and go, well, it's probably enough. It's enough. Why am I coming to the property?

SPEAKER_01 10:56

I mean, I know you you and I have had conversations, and I don't know if you were to know this, but Polly actually used to be one of my clients. Uh, still is one of my clients. I was about to say you used to be one of my clients before you started working with me. Um, but no, you are still one of my clients. Touch wood. Unless we find out later. Um, but no, we've had a bunch of conversations about that thought process where, you know, okay, well, what's next? Or what does that next step of the investment journey look like? Um I think you're definitely in that um, you know, we've done that accumulation phase and now we're really in that sort of, okay, well, what do we want that sort of future position to look like?

Just because the bank says yes...

SPEAKER_00 11:34

Yeah, and I think for me really is just because the bank is lend willing to give you all the money doesn't mean you just need to keep um acquiring, isn't it? So I feel like um it's an important thing.

SPEAKER_01 11:43

I mean, it's very it's very easy to be in that mindset where you're like, yep, we've got to get got this one on to the next one, because that's a really big, you know, part of that accumulation phase, right? So you know, and that journey can be different for everybody, right? So, you know, I've got some clients that have several investment properties, they're thinking about expanding into commercial because they want to try and explore other avenues for investing their funds. Um, I've also got some clients that have two houses, one from one that they used to live in, and then they started a family and upgraded to the second one. Yeah. And then they want to hang on to that first one because that was their first home.

Why enough is personal

SPEAKER_01 12:14

So I don't think there's a cookie-cutter answer for when enough is enough. I think it comes down to sort of where your personal or where your comfort levels sit in terms of what that looks like.

SPEAKER_00 12:25

Cool.

SPEAKER_01 12:25

So to wrap up, um to wrap up, um so long story

Final thoughts

SPEAKER_01 12:31

short, I don't think that there is a particular thing that says this is the end or this is when we're finished. Um I think it really comes down to working out what you think is enough for where you are. Hopefully, hopefully it answers your question, Andrew. Um if not, I'm telling you to give me a call and tell me. Hopefully, you are still my client, and hopefully, it's still my client as well. Um, if you do have any other questions, feel free to send them through. Um, always a pleasure to talk to you, Polly. Um, I'm very excited to actually have conversations with arguing. Not that we argue, but that's fine.

SPEAKER_00 13:02

Thanks.

SPEAKER_01 13:02

Have a good week. We'll see you around.

SPEAKER_00 13:04

Bye.