Updated date:

4 Smart Steps to Build Wealth and Retire Wealthy with Residential Property Investment


The steps I discuss here are not new. I certainly didn’t invent it and neither did I have a franchise on it. I have mentioned in my hub on Mindset hub that all it takes is for you to realign your thinking. The only problem I shall point out here is that it is so simple that people overlook that one can use good debt to build wealth by borrowing and investing in investment property.

The investment climate in Papua New Guinea (PNG) has changed dramatically over the years. Despite the uninterrupted economic growth over the past 12 years according to the treasury department, their analysis reveals that not much of the economic growth has translated into tangible development. Inflation is hitting the people hard. Cost of living in PNG is amongst one of the highest in the entire world. So at a time when Papua New Guineans are thinking about investing for their future, they are wondering if the simple age – old steps still works in these changing times.

My research shows that this 4 steps for building wealth through residential property investment is just as valid today as it was many years ago and will be many years later. Inflation rates, interest rates, growth rates, rates, vacancy rates and most other rates that you could possibly think of have changed over the years. All these changes have not affected the recipe for building wealth that this hub covers.

What I discuss is a snapshot of the long process that requires careful study. Let this short hub start you off into your journey of investing in residential property. Let me also make it clear here that I am concentrating on residential property where I have direct experience. There is also the commercial property to look at.

The 4 Steps


Begin with a goal

I love this old adage that goes like this “Failing to plan is planning to fail”. No matter how good you think you are, without a plan, you destined to fail. Investing is a serious business as I always say. So if you are not serious, please save your money and time for something else. You can loss all your hard earned money if you don’t do it right. That’s the other side of the same coin call investment. Start with an end in mind as Dr Stephan R Covey said in his book The Habits of Highly Effective People.

Sit down with pen and paper and list down the reasons why you want to invest in residential property. If the odds of success are high on your favor, then go for it. When I say start with end in mind, I meant to say that you’ve got to decide when you want to retire. Self-made millionaire, investor and educator Robert Kiyosaki calls this ‘your exit strategy’.


Bank your savings

If you have to invest in residential property, you must have some initial capital to begin with. That means putting enough money aside to be committed to your residential property investment. Start saving as early as you can. Create a savings account with no ATM access and arranged for automatic deductions from of your desired percentage of salary into your savings account. This prevents you from the temptations of using your money before investing. One thing you must know is that the wealth people pay themselves first before others. How is this possible? Well! The wealthy people save what they earn first before spending whatever that is left. The poor on the other hand, spend first then save later. In most cases, the poor spend everything and have nothing to save. You know the outcome don’t you? Of course. Very few people are wealthy and the majority are poor and broke or just coast by.

Buy your first home

If you have enough savings in your account, the smart way to build your residential property investing portfolio is to use Good Debt. Borrow against your cash collateral and buy your first home. Let me suggest that you look for P& I loan. Make sure it is within your means. All mod cons comes later. Don’t stress yourself by getting loan that is too much for you. Make your experience less stressful by planning ahead as I mentioned in step 1.

Some people may want to buy their first home and not investment property. There are no hard rules here. Do what you think is best for you based on logical decision.

Build equity in your home

Pay off your first loan as quickly if it’s your first home. This also applies to your investment property. It is really not necessary to completely pay your loan off before you start the next step.

Step 2: Buy an Investment Property

Borrow against your home equity

If you have bought a home as your first home, then this becomes the second step you take. Borrow against your first home as equity. How can you do this? Use your own home as collateral to borrow the entire amount for your first investment property plus the associated costs.

Ideally, the loan should be Fixed-rate Interest, only.

Buy you first investment property

As a general guide, look for medium-priced property, in a reasonable location and in a region with long-term sustainable growth (Normally large city or town).

Make money flipping houses

Step 3: Build a Property Portfolio

Buy more properties

As cash flow increases, refinance to buy more and more properties using the growing equity as collateral. Apply for a tax variation to enhance cash flows.

Be careful

Very careful planning is essential. If you fail to plan, you plan to fail. What do I mean? Plan everything down to detail and most importantly, budget careful. Your budget will be affected by your plans so that’s why I strongly urge you to plan things careful. Set up credit lines where necessary and remember to always keep some cash in hand. Fix the interest rate for at least three years. Take out insurances and set reasonable rents. Maintain the property.

Be patient

Patience is the key to any wealth building activity. Either in cash, shares or property investment, you need more patience than is required. You have to learn to delay gratification if you want to build more wealth and retire wealthy. The other trap, residential property investors fall into is that they think, grass is greener somewhere. Instead, build more value into your property and sell at a much higher price during your retirement. Many people look for greener pasture elsewhere and sell too soon. Don’t sell just to see how much you have made. This is a very foolish decision. Value of your property will increase overtime so stick to it.

Step 4: Balance the Debt on Retirement

Balance the debt

The main focus here is building more wealth using residential property so you can retire on your property. You are a residential property investor. There are also residential property traders. You may have heard of someone who builds and sells and buys low and sells at higher prices. That person is resident property trader. There is a big difference between Property Traders and Investors.

When you retire, your rents will become your main source of income. Manipulate the debt levels by selling one or more of income. Manipulate debt levels by selling one or more properties to reduce the loan so that you can now have a positive cash flow.

Buy luxuries

If you have made this far, then the gates of Heaven will open up for the discipline, commitment and passion you have shown to build your wealth. You can enjoy your wealth by buying any luxuries you want.

Reward yourself with this powerful video on how to make money with residential property


Retirement in this context doesn’t mean you wait till 60 to 70 years old to enjoy your money. If you thinking along this line, you are completely wrong. Retirement can occur at any age. I am looking forward to mine at age 35 and I am 28 years of age as I wrote this hub. Stay disciplined as build wealth fast using good debt and money management so you can balance off your debts and retire rich and young as Robert Kiyosaki rightly said in his book Retire Young Retire Rich.

© 2014 Ian D Hetri


Simon Dickson on March 25, 2020:

Very helpful, practically applicable anywhere

JP Gene on December 14, 2018:

Thankyou, very succinct and applicable.

Ian D Hetri (author) from Papua New Guinea on May 20, 2014:

You are welcome howlermunkey. Cheers

Jeff Boettner from Tampa, FL on May 20, 2014:

Hi Ian, good sound advice here, filing away for reference.

Ian D Hetri (author) from Papua New Guinea on May 19, 2014:

Hi Ericdierker

Thank you. Its always my pleasure to find my hubs affecting people in positive ways.



Eric Dierker from Spring Valley, CA. U.S.A. on May 19, 2014:

Very interesting. applicable anywhere.

Ian D Hetri (author) from Papua New Guinea on May 18, 2014:


I appreciate your time here. I have been personally advocating for practical insights into business and investment to Papua New Guineans. We aren't taught things like the ones I discussed in the hub. None at all in all the universities in PNG, two of which I attended.

Its few that go out, learn this things and try to teach others. I am one of those few and it gives me great pleasure to share what I know and do.


Baptist on May 18, 2014:

Bro great stuff...I can only encourage you to keep doing it. Found the information very useful. We PNGans need more simplified financial information. Cheers!

Related Articles