In this episode, Damien and Jeremy tackle a common investor question: with a set budget, say, a million dollars, is it better to buy one larger property, or split that budget across two or more cheaper properties?
The Case for One Larger Asset
Jeremy notes the main advantage of buying a single, larger property is simplicity: only one purchasing decision, one location to research, and (if using a buyers agent) only one fee to pay. Damien agrees, adding that fixed costs like cleaning, legal fees, and building and pest inspections are also only incurred once, though he notes these are comparatively small costs next to the buyers agent fee, which he considers the more significant saving.
What "Quality" Actually Means
Jeremy pushes back on the common advice from some self-styled experts that investors should buy "the most expensive property they can afford" or prioritise "quality," arguing that the only qualities that genuinely matter for any investment, property, shares, or otherwise, are low risk, high growth, and strong cash flow.
Damien notes that splitting a budget across two cheaper properties (for example, two $500,000 purchases instead of one $1 million purchase) typically improves yield, since cheaper properties tend to offer somewhat better cash flow. He also flags stamp duty as a factor to weigh in, noting that a single expensive purchase concentrated in a higher-stamp-duty state like Victoria could cost meaningfully more than spreading purchases across states with lower stamp duty, such as Queensland.
Land Tax Considerations
Damien raises land tax as a further consideration, particularly for larger or more active investors. Since land tax is a state-based tax, concentrating property purchases within a single state (especially one where the investor already owns a principal place of residence) can push an investor over the relevant threshold, whereas diversifying across states can help avoid or reduce that liability. He shares that he's seen clients who purchased three properties within Victoria end up with a meaningful land tax burden affecting their cash flow as a result.
Asked what he would personally do with a million-dollar budget, Jeremy says he would diversify across multiple areas rather than concentrate the risk, noting that for him personally, researching multiple areas isn't a significant burden. He acknowledges that a newer, less confident investor might understandably prefer to focus their research effort on a single property, but pushes back on the common misconception that buying close to the CBD or in an expensive, high-income area is necessary to achieve strong capital growth, noting that this simply isn't supported by the evidence.
Damien adds that splitting a budget doesn't need to be a precise 50/50 split, an investor could lean slightly more aggressive with one property and pull back a little on the other, depending on borrowing capacity. He also notes a psychological benefit to starting with a smaller first purchase: gaining confidence and comfort with the process before committing to a second property some months later. Both agree that the broader lending environment, including the direction interest rates are heading, is worth factoring into how quickly an investor moves, since building an asset base earlier gives it more time to grow.
Growth, Cash Flow, and Risk: The Three Qualities
Jeremy revisits his three qualities of interest, capital growth, cash flow, and risk, and explains why buying in a more expensive, "exclusive" area doesn't actually improve any of them. On capital growth, he notes there's no evidence that buying in a more affluent area produces superior growth. On cash flow, more expensive properties reliably come with lower yields, so there's a clear inverse relationship between price and cash flow. On risk, buying two cheaper properties instead of one expensive one naturally spreads risk across two markets (for example, one property in Brisbane and another in Adelaide) rather than concentrating it in a single location.
Jeremy also raises volatility as a further risk consideration, noting that more expensive, affluent areas have historically shown higher volatility than cheaper ones. He references a CoreLogic decile report (which he hasn't seen published in recent years) that tracked the top 10% most expensive suburbs nationally against the cheapest 10% since around 1990. Across four historical periods where national property values fell, the most expensive decile fell the hardest each time, while the cheapest decile avoided a decline entirely in one of those four periods, demonstrating that cheaper property has historically been considerably more stable. Jeremy notes this runs counter to the commonly repeated idea of a "flight to quality" during downturns, arguing the data instead shows a "flight to affordable," which is what supports the lower end of the market during tougher periods.
Taken together, Jeremy concludes that buying a single expensive property underperforms on two of his three key qualities (cash flow and risk) while offering no advantage on the third (growth), which is why he sees little reason for investors not to split their budget across cheaper properties instead.
Splitting the Budget: Practical Considerations
Damien agrees, noting that splitting a budget does mean paying buyers agent fees twice if using that service (roughly 3%, or about $15,000 on a $500,000 property, a meaningful transaction cost), but that this can still be worthwhile if it results in better-selected properties, or can be avoided altogether by researching independently.
On risk, Damien stresses the importance of understanding personal plans upfront, particularly whether an owner-occupied home purchase is on the horizon. He's seen investors buy aggressively into multiple investment properties only to find their borrowing capacity exhausted when they're ready to buy their own home a year later, forcing a sale. His suggested approach is to factor a future home purchase into the plan from the outset, for example, allocating a smaller amount toward an initial investment property (say $300,000) while preserving enough capacity to secure a home (say $700,000) within a set timeframe like 12 months, rather than over-committing to investments and having to unwind that position later.
Selling and Flexibility
Both agree that holding two properties instead of one gives more flexibility if circumstances change, since an investor may only need to sell one property rather than their entire holding to free up funds for a home purchase. Damien notes his personal preference would be to plan ahead for a known home purchase rather than buying two investment properties only to sell one shortly afterward, given how costly the transaction costs of buying and selling in quick succession can be. His view is that protecting the future ability to buy an owner-occupied home should take priority if that's part of an investor's plan, since relying on investment growth materialising in time to fund that purchase carries real risk if that growth doesn't happen as expected.
Sell-Down and Retirement Planning
Damien cautions against the mindset of accumulating a very large number of properties (10, 20, 30+), noting that in his experience building financial plans for clients, two to four solid investment properties are often sufficient to reach an investor's goals. He outlines two broad approaches to eventually clearing debt: selling down a property directly, or holding the full portfolio until superannuation becomes accessible at 60 (in consultation with a financial planner) and using that to pay down debt, since selling a property early means losing that income and incurring a capital gains liability.
He notes retirement timing significantly affects this planning. Using an example of wanting to retire at 50, an investor might spend a decade progressively drawing down an offset account (say, built up to around $300,000) before superannuation becomes accessible at 60 and replenishes that position. In some cases, clients have pursued a more aggressive early sell-down strategy specifically because selling a property while not working (and therefore having lower taxable income) reduces the resulting capital gains liability. Damien's overall takeaway is that this kind of planning benefits from being mapped out clearly, whether on paper or in a spreadsheet, well ahead of time.
Closing Thoughts
Jeremy notes that newer investors are somewhat naturally protected from the "buy one expensive quality asset" trap simply because they typically don't yet have the borrowing capacity for a million-dollar purchase, though higher-net-worth individuals entering property investing for the first time can still be persuaded by this framing, and would still be better off buying cheaper, diversified properties.
Jeremy also addresses a common objection: the concern that cheaper areas attract lower-quality tenants who might damage a property. He argues this risk is easily mitigated by not being overly greedy with rent pricing (accepting slightly under top market rent, for example, suggesting $480 instead of a possible $500, to attract more applicants and allow for better tenant selection), using a well-vetted property manager, and holding landlord insurance. His closing tip is simple: avoid buying an off-the-plan unit for a million dollars.
Both close by encouraging listeners to explore other episodes of the podcast for further insights.