In Australian property investment, the order in which you build and manage your assets can make or break your long-term financial success. A common question asked by both budding and experienced investors is: “Should I pay down my debts before acquiring more properties?” The resounding answer from seasoned professionals is ‘no’. True property investors understand that acquisition typically comes first, and debt consolidation comes later, once you’ve built a solid, scalable portfolio.
This strategy isn’t just a theory it is a proven formula followed by high-performing investors across Australia. Let’s break it down.
Start with Acquisition – It’s the Foundation of Growth
At the heart of successful real estate investing lies acquisitionwhich is the art and strategy of identifying and purchasing properties that align with your investment goals. Starting your journey with acquisition gives you the power to grow your wealth exponentially over time.
The typical roadmap looks like this:
1. Begin with a Small Investment Loan:
The first step is often the hardest but it doesn’t need to be risky. Most investors start with a small investment property using an interest-only loan. The idea here is to maximize cash flow and tax deductions while letting capital growth do its work.
2. Leverage as Much as You Can:
Smart investors understand leverage. In real estate, leveraging means using other people’s money (mostly the bank’s) to grow your wealth. With property, even a 10–20% increase in value on a leveraged investment can yield substantial returns.
3. Keep Buying and Scale:
Once your first property grows in equity, you can use that equity as a deposit to buy your next one. Rinse and repeat. This is how portfolios are built—not overnight, but steadily and strategically.
According to CoreLogic’s Home Value Index released in June 2025, Australian housing prices rose 8.6% year-on-year, with Brisbane and Perth leading the way with double-digit growth. In such a growth environment, holding multiple properties offers compounded benefits as each one grows independently in value.
Why Acquisition Should Come Before Debt Consolidation
Many new investors are tempted to “play it safe” and start paying down their debts early on. While this is understandable, it’s often counterproductive if your goal is to build long-term wealth.
Here’s why:
• Inflation Works in Your Favor:
Over time, inflation erodes the real value of money. What feels like a heavy mortgage today may be a manageable, even negligible, expense 10 or 20 years down the track. For instance, if your repayments are fixed but your rental income and property value keep increasing, your debt becomes less significant relative to your income and assets.
• Capital Growth Outpaces Debt Repayment:
If you prioritize acquisition, your properties will grow in value, and so will your equity. The more equity you have, the more borrowing power you gain. It’s a virtuous cycle. Conversely, paying down debt early locks up your capital and limits your growth options.
• Tax Benefits:
Investment property loans—especially interest-only—are often tax-deductible. By focusing on growth and claiming deductions along the way, you improve your annual cash flow and create a more sustainable financial position.
When Is the Right Time to Consolidate Debt?
Debt consolidation isn’t off the table—it just comes later in the journey.
Typically, investors start to think about consolidation when:
• They’re approaching retirement
• They want to leave their 9-to-5 jobs and transition to a passive income lifestyle
• They want to reduce stress, simplify their finances, or prepare to pass wealth on through estate planning
This is when you evaluate your portfolio and ask:
Which properties have grown the most?
Which ones are delivering the best yields?
Which ones can I sell to reduce my overall debt burden?
By this stage, your assets should have grown substantially in value. Selling a few top-performing properties allows you to pay off the mortgage on the others, thereby increasing your passive income stream and reducing risk as you move into the next phase of life.
Of course, this all depends on your age, goals, and the timing of the market. For example, if you’re in your 30s or early 40s, it’s often wiser to stay in acquisition mode. If you’re in your late 50s or 60s, your strategy might shift toward consolidation and cash flow.
A Real Example: Bharat’s Journey to 40+ Properties
Take our founder, Mr. Bharat, for example. With a sharp eye for opportunity and a strategy rooted in long-term vision, he has now acquired more than 40 investment properties across Australia. And he is still buying.
Why?
Because Bharat understands that today’s debt is tomorrow’s asset. He knows inflation, capital growth, and increasing rents will eventually outpace the cost of borrowing. He’s focused on building a strong, diversified portfolio first—and only after he hits his goals will he start planning debt consolidation.
He’s not alone. Several of our investors have followed the same blueprint—some owning 8 to 12 properties already and are still actively buying.
This isn’t blind ambition. It’s a calculated, data-driven strategy backed by current market trends. According to ABS Housing Finance data (May 2025), investor lending increased 18.5% year-on-year, indicating growing confidence in property as a long-term asset class.
Tips for Following the Acquisition-First Strategy
If you are ready to adopt the acquisition-before-consolidation mindset, here’s what you need to keep in mind:
1. Work with Experienced Property Advisors:
Partner with advisors who understand how to structure your portfolio and use equity wisely.
2. Keep Loans Interest-Only Initially:
This maximizes your tax deductibility and cash flow during the growth phase. It is a common practice among professional investors.
3. Track Your Equity Closely:
Stay informed about your property values and refinancing options. Equity is your gateway to the next acquisition.
4. Diversify Across Markets:
Avoid putting all your eggs in one basket. Consider spreading your investments across multiple states to benefit from different growth cycles and land tax thresholds.
5. Keep Good Records and Stay Compliant:
Tax and compliance issues can undo all your hard work. Stay on top of your paperwork, and use a savvy tax professional and not just someone with a booth at a shopping center!
Build First, Consolidate Later
The journey to real estate wealth is a marathon, not a sprint. And like any marathon, strategy matters. By focusing on acquisition first, you build a foundation of appreciating assets that multiply your returns over time. Once your portfolio reaches critical mass, debt consolidation becomes a strategic move rather than one on impulse.
Inflation, rising rents, and Australia’s resilient property market are all on your side, if you play your cards right. Follow the path of Bharat and many other investors who’ve built robust portfolios by delaying debt repayment in favor of long-term growth.
