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How to build a property portfolio from scratch in 2026
Want to build a property portfolio from scratch in 2026? One expert reveals how to start with affordable units, maximise borrowing power and use equity to keep growing.
Building a property portfolio in 2026 has become harder amid higher borrowing costs and tighter lending, but one expert said investors do not need a large deposit or an expensive house to get started.
According to LEVR founder Josh Crealy, investors could still find opportunities by looking beyond Australia’s most expensive markets and focusing on affordable properties with manageable holding costs.
However, he said that getting the “first purchase right” required more than finding a property with growth potential, with investors needing a clear and realistic goal.
He said that before buying, investors should understand their borrowing capacity, consider ownership structures and choose an asset that wouldn’t prevent them from buying again.
“The number one point is just starting to work out where your borrowing capacity is, and work backwards from there,” Crealy said.
With different capital cities moving through different property cycles, he said investors need to look beyond price growth and assess where affordability, rental demand and supply conditions created opportunities.
From choosing the right professional team to using equity without taking on too much debt, here is how to build a property portfolio from scratch in 2026.
Work backwards from your borrowing capacity
According to Crealy, the first step in building a portfolio is to establish how much investors could actually borrow, then work backwards from their long-term goals.
He said investors also need to decide what they wanted their portfolio to achieve, whether generating passive income or paying off their dream home.
Crealy said the first purchase needed to leave room for future investments, rather than simply stretching to buy the most expensive property available.
“The number one point is just starting to work out where your borrowing capacity is, and work backwards from there,” he said.
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Get the right advice before buying
To build a portfolio that withstands all market conditions, Crealy said investors should team up with a specialised broker and accountant to choose suitable ownership structures and avoid limiting future borrowing capacity.
Crealy advised finding professionals who had invested themselves and helped clients build portfolios, rather than relying on advice from those unfamiliar with the process.
“The very first property I bought was in a trust, and then the first 13 were a mixture of trusts and companies,” he said.
Crealy said that the right structure depended on individual circumstances, making it important to get advice before buying rather than trying to change course after lending options had narrowed.
Look beyond houses to affordable units
While houses have been favoured, Crealy said that units were a good compromise for first-time investors.
He said that while houses historically delivered higher capital gains than units, they also had higher holding costs and could limit borrowing power.
He said established units made sense, especially in older buildings without lifts or basements, which carry lower owners corporation fees.
“If you go and just buy a house that’s negative 30 grand and you’re maximising your borrowing capacity, you’re just really just, you’re getting stuck straight away,” he said.
In Melbourne, he said a one-bedroom unit priced at about $350,000 could rent for $450 a week and come close to neutral gearing.
“Cash flow’s become more and more important,” he said.
Follow the market cycle, not the crowd
While it could be tempting to follow headlines, Crealy said investors need to look beyond recent price growth and assess supply, demand and affordability in individual markets.
According to Crealy, Melbourne has opportunities over the next five years and Sydney over the next decade, citing population growth, declining construction supply and affordability.
“I do think there is some great opportunities for growth in the next five years, in particular in Melbourne and I think Sydney over the next 10 years,” he said.
However, he warned against assuming every property in a growing market would perform well. Investors need to assess the conditions affecting their chosen suburb and price bracket.
Calculate the real cost of holding a property
Before buying, Crealy said investors’ finances need to be in order, including the property’s true cost.
He said investors need to account for stamp duty, legal fees, inspections, insurance, rates, land tax, owners corporation fees, and interest, rather than focusing only on the deposit.
Crealy outlined a $245,000 unit purchase that required $61,770 upfront with a 20 per cent deposit.
Annual non-interest expenses totalled about $5,300, while the existing tenant paid $320 a week, below the estimated market rent of $380.
With an interest-only loan at 6.5 per cent, the property ran at a shortfall of about $1,400 a year at the existing rent.
“This example alone shows why investors needed to calculate the numbers before buying instead of relying on future rent increases to make an investment viable.”
Use equity without getting overextended
Similarly, Crealy said that by using equity, investors could fund another deposit without having to save the full amount again.
He said a higher valuation could unlock equity, citing a property bought for $245,000 that later received a bank valuation of $390,000, allowing the owner to refinance to an 80 per cent loan-to-value ratio and borrow $312,000.
However, he warned investors against repeatedly releasing equity without keeping cash in reserve.
“What I do is I like to leave a buffer. So if I pull money out from equity, I put some aside and keep building the buffer. The more the debt goes up, the bigger the buffer gets,” he said.
Prepare for tighter lending and changing tax rules
Crealy said the recent changes to negative gearing had prompted some investors to reconsider their strategies, while lending policies continued to affect how quickly they could expand.
He said some lenders would consider an accountant’s letter confirming an entity was self-servicing, potentially helping investors secure finance for another purchase.
“Banks are making it harder, but there are some that still do it,” he said.
However, he said investors could not assume every lender would assess their circumstances the same way, and that understanding the tax and lending implications of each purchase is essential before committing to a strategy.
Be patient and avoid chasing quick returns
Rather than chasing fast gains, Crealy said investors were better off starting with manageable assets and building their portfolios over time.
He said he had experimented with other investments and development opportunities before returning to affordable properties.
“I think patience is a big thing. Just start with like boring things,” he said.
He said that understanding market cycles was one of the biggest lessons from his investing experience but cautioned that not every property would perform well.
“For new investors, the focus needed to be on making considered purchases and avoiding unnecessary risk rather than trying to get rich quickly,” he said.
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