Ask Paul: I owe $900k on four properties - should I buy one more?


Q. I am a single mum of three teenagers, aged 14, 16 and 18, who lives with me. I own my own home, valued at $730,000.

I have three investment properties valued at $435,000, $365,000 and $335,000 with loans of $230,000, $330,000 and $310,000.

I also have started a small share portfolio. I put away $50 a week and usually use $2000 from my tax return and buy shares when I can afford to do so. All the rentals are cash-flow positive now, by $148 in total (this is after all outgoings). I earn $76,000 gross.

ask paul clitheroe money advice investment properties

My question is, what do I do next: continue to save and buy more shares or try for another property?

I have $35,000 in a high-interest online savings account in case of emergencies and have about the same in my day-to-day account. I also have a holiday account with $10,000. I am a good saver but feel I save too much and should be doing more for my future.

I have a contract for my job for the next three years and after that I will need to find another one or hopefully be able to work part-time. - Sharon

No more property - enough already, Sharon!

You have no doubt done plenty of hard yards raising your three kids and, to your credit, you have put yourself into a solid position with your money.

But right now, with four properties and a pretty fair amount of debt, I just don't think it is a good idea to keep investing with a single focus.

Yes, I get it that your properties are positively geared but you have most of your eggs in one basket.

Bad things can happen to good people, and if your contract renewal period coincided with a recession, and a couple of vacant properties, things could get very uncomfortable for you.

So I favour a plan to diversify by building your share portfolio, or you could look at topping up your super.


Paul Clitheroe AM is a respected financial adviser and Money's founder and editorial adviser. He is chair of the Australian Government Financial Literacy Board, and author of several personal finance books. Click here to email Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section.
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