Real Estate Investment: Where to Make the Most Money in 3-5 Years

Here are your options for making the most money in property in 3 - 5 years time.

Property investors think in periods of decades rather than years. So take this as a rule of thumb for property investment. The shorter your investment period, the greater the risk.

Financial planner Brenton Tong from Financial Spectrum said that, “3 - 5 years is a really difficult time frame for investing as it’s not quite long enough to ensure that you’re going to get a solid return without significant risk.”

But this doesn’t mean that people don’t look for the ‘quick win’ in property. Tong pointed out that for some of his clients, “it’s just too long for most people to just leave their funds in the bank.”

There are a couple of options for making a dollar in short term property investment. Some are better than others. We have had a look at the different ways you can make money off property investment in a period of 3 - 5 years.

Where to make the most money in 3 - 5 years with property investment?


Brenton Tong:

Spectrum Financial Planning

"If a client were to come in to say they had 3 - 5 years to invest, we would not be offering direct real estate as an option. The time frames are just too short. We would be quite reluctant to do anything really, as we find that often if people say 3 - 5, it often turns into two years. The main focus would be that of strategy – why is it 3 - 5 years? Can the pivot point that they are waiting on (are they saving for a deposit on a property? A holiday? A car?) be brought forward so we can look at a longer term solution?

If push came to shove and we had to recommend something, we’d be inclined to use an Australian Property Index Fund — as either a fund or an ETF. These funds will buy the listed property trusts that make up the S&P Australian Property Index. You get diversity across the major listed property trusts with exceptionally good liquidity. Additionally, by tracking the index you’ll have a potentially better tax outcome than an active fund and have exceptionally low fees without the hassle of managing it yourself."

Back to top

Buy an existing property

Is 3 - 5 years too short of an investment period?


Ben Kingsley:
Empower Wealth

Investment-grade properties are ones which offer solid prospects for capital growth over the long term and have a high demand as good rental accommodation. Often people think once they get a good amount of growth from an investment property they should 'cash it in' and realise the capital gain. But smarter investors don't do this, they know the on-going rent is a wonderful passive income which forms part of their on-going retirement income and further still, the longer they hold it the greater this income will be, not forgetting the potential of further increase to the property's value.

In our business, when we develop property investment plans we talk about investment horizon in three stages: short (0 years) medium (15-25) and long term (25+). So my message is very clear - when you consider property as an 'investment' rather than something you might trade or speculate on you will begin on your long and fruitful journey of a wealthier tomorrow.

Also called ‘buy and hold’, this is the strategy that most people will be familiar with. Over a period of ten to twenty years, a buy and hold strategy is a pretty safe bet, but when you factor in government charges, like stamp duty, there’s a chance you may not even break even after owning the property for a period of 3 - 5 years.

Take this example: You purchase a property for $500,000. Stamp duty costs alone are $18,311. Factoring in other set up costs, you may be looking at about $22,000 in fees for the purchase of a property. Lender’s mortgage insurance may also apply if you don’t have the money for the deposit, too, which can be anywhere between $10,000 and $15,000 depending on the loan size. You’re looking at approximately $35,000 in total to purchase a property.

To break even, you would need to sell the place for about $550,000 (factoring in agent’s fees). And that’s breaking even: your profit is $0.

Technically, a property could appreciate in value by $50,000 in three years. But look at the Sydney property market between 2003-2008. Tong said properties in Sydney experienced little capital growth compared to other capital cities in Australia.

You need to do your research before you commit to the purchase of a property. Especially so if you plan on selling the investment a couple of years after it’s purchased. A buyer’s agent can help you identify the location of the next ‘hot’ suburb.

Back to top

Renovate an existing property

The above example relies on capital growth due to an increase in property prices. Investors can also manufacture capital gains by making improvements to an existing property to make it more desirable to potential purchasers. Purchasing, renovating and selling an investment property is attainable in a 3 - 5 year time frame.

Renovating for profit.


Chris Gray:
Your Empire.

As with many investment strategies, the key is good research. Gray recommends the following steps before you start renovating:

  • Find out what buyers are looking for. “Ask real estate agents, 'what do people want?' How many bedrooms, bathrooms and storage spaces do they want — what's in massive demand?”
  • Find out what tenants are looking for. "Iif you're planning to rent your property out, consult a property manager and find out the demographics of the area and what potential tenants want."
  • Get a professional valuer. "Real estate agents and property managers still have a bias. An independent valuer can help you out when deciding how much to spend on renovations, to stop you from under or overcapitalising for the particular area."

Investment property expert Chris Gray said that providing you do your research, renovations are a low-risk investment. “As long as it's not a structural renovation you'll get a guaranteed result. Unlike an offshore investment, you can physically be there. There's still risk involved — so you have to follow the right steps,” he said.

Profits from a renovation can depend on what improvements are made. According to Gray, “A simple fresh coat of paint and new carpets can cost from $5,000 -$10,000, but could add triple this amount to the value of the property.”

Gray points out that in his experience, a typical renovation costing $60,000 can generally add about $80,000 to the value of the property. Things like a new bathroom, a new kitchen, a new paint job and other cosmetic improvements are easy wins. Stay away from a property that requires extensive structural modifications, Gray said that these improvements aren’t likely to generate the greatest returns and cost more than cosmetic changes to the property.

The buyer’s agent said be realistic about the time and money you allocate to the renovations.

“Two bedroom units will usually take four to six weeks to renovate, whereas other projects might take a whole year - it depends on what you're doing," he said. "A good rule of thumb is to double the cost estimate and double the time estimate and then see if you'll still make a profit.”

Back to top

Buy a new property

Purchasing a new rather than existing dwelling may be a more attractive option for some as some state governments give concessions for the purchase of a new property. This reduces the upfront costs and the amount the property needs to appreciate in value before reaching the break even point.

The state and federal governments change these rules regularly to inject life into the property market, or to slow it down. You can monitor stamp duty charges by using stamp duty calculator. You can also view whether these concessions are available to investors or owner occupiers through the relevant state government website.

Back to top

Property trusts

What is a property trust?

When a group of people purchase a large property, or a portfolio of properties, they purchase the property in the name of a trust. The trust is responsible for the ownership of the property and the trustees all have a stake in the investment depending on how much money they’ve invested into the trust.

Property trusts tend to focus on commercial and industrial property rather than residential. These types of properties tend to move in line with the economy as a whole. According to Tong, “the emotional aspect of buying something you love to live in just doesn’t factor when it’s an office building.”

Property investors can get involved in two different types of property trust in Australia: listed and unlisted property trusts. The main difference between the two is whether the trust is listed as a public company on the Australian Securities Exchange (ASX) or not.

Listed property trusts are known as REITs, an acronym for ‘Real Estate Investment Trusts'.

Listed or unlisted?

If a trust is not listed on the ASX, there’s no exposure to stock market volatility. If a trust is listed on the ASX, it’s easier to sell your stake in the trust when you want out.

Back to top


REITs offer the liquidity of the stock exchange coupled with an asset that is backed by real estate. You can buy and sell your shares in a REIT on the ASX and returns are relatively stable and easy to predict.
However, this isn’t always the case. REITs are listed on the ASX and despite the fact that REITs are generally backed by a diverse listing of commercial property, the value of a REIT can rise and fall with the stock market.

Back to top

Property managed fund

A third option is to invest in a managed fund. A property managed fund invests in both listed and unlisted property trusts. Like listed trusts, your share in the fund can be sold easily enough, but this comes at the trade-off of fund management fees.

Back to top

Is a property trust a good idea for a short term property investment?

Yes and no. The answer depends on the structure of the property trust.


  • Less to invest. Capital requirements are lower than other property investment strategies. The upfront costs of investing in a property trust can be lower than a knock down rebuild property investment strategy.
  • T + 3. Because listed property trusts are listed on the ASX, they’re a liquid asset. If an asset is listed on the securities exchange and you sell it, you get your money three days after the trade.


  • Unlisted property trusts can be difficult to leave. Unlike a listed property trust, where you just sell or buy shares from a pool listed on the ASX, the fund manager is responsible for providing and managing the funds within the trust. “Typically, a special majority of investors (for example 75%) can vote in favour of either winding up the investment or letting it continue for longer,” Tong says. The timeframe and period of investment is in the hands of other people. This may present issues for investors looking to exit the trust after a period of 3 - 5 years.
Back to top

Marc Terrano

Marc Terrano is a content marketer manager at finder. He's been writing and publishing personal finance content for over five years and loves to help Australians get a better deal.

Was this content helpful to you? No  Yes

Related Posts

Ask an Expert

You are about to post a question on

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms and Conditions and Privacy Policy.

2 Responses

  1. Default Gravatar
    SooJune 23, 2013

    I feel overwhelmed with info relating to investing in property; for approx 8 months. ‘All I want’ is to be able to be in a position, in the next 10 years (or less) of living in a home I want with my son.
    I think I could do with a structured course about essentials; such as loans, using equity to buy properties…I found one, but very expensive…???
    Thank you.

    • Staff
      MarcJune 24, 2013Staff

      Hello Soo,
      thanks for the question!

      I can’t provide advice when it comes to investment property education. What I will say is do your due diligence and beware: some of these so called ‘courses’ can be ways for property spruikers to introduce potential investors to scams or to buy their products. There is a wealth of information on the internet for free. Absorb as much of this as you can in addition to books about Australian property investment (Noel Whittaker’s ‘Making Money Made Simple’ is a good starting book which talks about much of what you listed), and then if you still feel one of these courses may be useful and is worth the cost, apply.

      I hope this helps,

Ask a question
Go to site