The real cost of holding a growing portfolio
Most people assume sustaining a portfolio of any size takes a huge amount of surplus income sitting in the bank every year.
That assumption is what stops people moving forward in their portfolio journey. See a shortfall like the one below and it looks like proof you need to be earning far more before you could handle a portfolio that size. What's actually missing isn't income. It's an understanding of the mechanics that bring that number back down.
Once you see how this works, the path to growing and holding a portfolio long term looks different. This is the part that keeps some investors stuck after their first or second purchase, while others keep buying.
As a buyers agent, I review my own holding costs every year the same way I'd review a client's portfolio position. The gap between rent received and repayments, and how it's covered, is what determines whether a portfolio holds up, not the size of the pay cheque you think needs to cover it.
The pattern so far
FY24/25, our portfolio's pre-tax cashflow was minus $23,063. FY25/26, minus $8,632. Household income was actually reduced for part of that year while my partner was on parental leave. The improvement came almost entirely from the other levers, offset discipline and rental growth, and that's with interest rates going up three times over the year.
We've just settled on a new purchase. Based on my modelling, the worst case shortfall for this financial year sits around $1,000 a week, roughly $52,000, assuming we can't refinance in January and none of our surplus cash gets trapped in the offset. That's not a prediction. It's the ceiling, built on the least favourable input. Where rents land, what happens with the refinance, how much actually ends up sitting in that account, none of that is knowable right now.