Scott and Mina O’Neill started last decade with a modest first home purchase and ended it with a $20 million property portfolio to their names.

The Sydney couple had enough passive income to quit their day jobs about six years ago, and have since spent at least three months a year overseas.

They now own 32 properties in five different Australian states — and one in Greece — including eight on the commercial side, which they say has boosted their success and allowed them to build the massive portfolio they continue to grow while helping others.

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Mr and Mrs O’Neill, aged 32 and 31, started business Rethink Investing in 2014, assisting clients achieve goals using the strategy and rules they have used to build their own wealth.

Their method is focused on “good cash flow and good capital growth”, which Mr O’Neill describes as “the key to success” at the centre of their long-term-hold investment framework.

“The first one we bought was a house with a granny flat in Sutherland, Sydney; we paid $480,000 for it in 2010. The property was renting for about $680 a week — that basically meant it was positively geared,” Mr O’Neill told the Herald Sun.

“The choices we had at the time were to buy a house or a unit. If we bought a unit it would have been negatively geared, on a strata title with less rent because it didn’t have dual income like the house did with two separate leases.

“The house we bought is now worth $1.1 million, and units we were looking at have just not grown anywhere near as much. That one property made such a massive difference for us as it had both capital growth and great cash flow.

“I had about $60,000 for the first property deposit, which took me over five years to save. This first purchase set the idea that if we could buy properties that were positively geared, that meant every time we bought one we were creating a passive income for life.

“In this case, we were earning over $10,000 per annum net income after all costs — with the rent minus maintenance and rates, we still had about $10,000 in our pocket — so the idea came: if we could try and buy 10 we’d have a $100,000 income.”

The O’Neills focused on those pillars of cash flow and capital growth — which can be split between two properties — while diversifying their portfolio outside their home city after buying in Maroubra in 2012, including unit block purchases, before entering the commercial side for new strong cash flow opportunities when they became hard to find residentially.

“Our third purchase was a unit block in Port Macquarie in 2014. So it was quite slow at the start but by the time 2014 happened we started to have a lot of equity in our two Sydney properties, which allowed us to instantly buy the next one,” Mr O’Neill said.

“We bought another unit block on the Gold Coast; each time we bought, our passive income grew and there was equity being created from our other properties.

“We bought a distressed house in Brisbane $40,000 under value, the vendors had bought elsewhere and had to sell that week almost, fast forward a couple of properties and we bought a dual income fish and chip shop with a 20-plus-year business tenant and a convenience store, a really big one that had been running for a long time as well — they made us feel safe to enter commercial for the first time, so we started looking at commercial property.

“We’ve invested into syndicates and houses where you can subdivide, with the main goal of maintaining or improving cash flow, with value-add opportunities, which could be as simple as capital growth on the market or as complex as creating a strata tile for a set of units.”

Their properties are in Queensland, South Australia, Western Australia, New South Wales, the ACT — and Greece (“That’s a holiday home which we’ll probably AirBnb for cash flow”), raking in $900,000 a year in rent, with their portfolio at 53 per cent debt.

Mrs O’Neill said the couple were rentvestors for 10 years, which helped them borrow more.

“In 2018 we bought a house to live in in Sydney — that was our 29th property and the first one we bought which wasn’t an investment,” she said.

Mr O’Neill said since they founded their investment company they had helped “1700-plus” clients buy “high yielding residential and commercial properties”.

“These are the types of properties we like to buy. Another key point for us is to buy in areas with tight rental markets and often have the potential to add value through small things like raising rents, renovations or simply buying in a growing market: that’s the stuff that’s helped us buy a lot of property,” he said.

Commercial property is their primary focus from a cash flow perspective, offering stronger yields than could be found in the residential market — but Mrs O’Neill said new investors were likely to feel more comfortable with residential so that’s where they would start.

They target freestanding houses with a minimum gross yield of 5 per cent in gentrifying capital city suburbs: incomes might be rising, infrastructure improving, a new hospital, university or train line being built or a ripple effect from stronger neighbouring suburbs.

“We don’t just want to buy good quality properties where you’re getting 3 per cent gross yield. Why? You can’t get the lending to keep going,” Mr O’Neill said.

“Part of that (getting loans) is making sure income is as high as possible; higher rents are a big part of helping that equation,” he said, adding rentvesting and commercial investing also assisted their borrowing capacity — as did well paid jobs as an engineer and in marketing.

The reality is it’s harder today than when they started, but they still had achievable advice for budding investors: “We’d advise our clients to look at something for $400,000-$500,000 where the rent is still good that’s got value-add opportunities from a rent perspective.”

“The everyday person buying their first property we tend to push towards a $400,000-$500,000 house in a capital city — we don’t look at units,” Mr O’Neill said.

“Invest how we did ourselves, in that respect: what we would look for and how we started.”

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SCOTT AND MINA O’NEILL’S TOP TIPS FOR PROPERTY INVESTMENT SUCCESS

-Consider investing beyond your backyard, such as interstate

-Don’t be afraid to consider alternative investment options, such as commercial

-Only buy based on numbers, not emotion

-Invest for both cash flow and capital growth, this can be spread across multiple properties

-Persist and set yourself goals to achieve, you’ll always find a way

-Become a really good saver before you invest

scott.carbines@news.com.au