Why a Safety Buffer Is the One Investing Rule Never To Skip

In 2022, I bought a property that, on paper, was meant to keep my portfolio "positively geared"—at least at the interest rates we had at the time.

I went all in, pouring every dollar I had into the deal, leaving myself with just $1,000 in reserves across all my properties.

My mindset? “This deal still leaves me with $20–30 per week in my pocket. I’m a strong saver—I’ll build my buffer back up fast.”

Then came 14 consecutive rate rises—the fastest tightening cycle in Australian history. My interest rate surged from the mid-3% range to 6.75%, nearly doubling my repayments.

Suddenly, my positively geared properties weren’t so positive anymore.

I could still cover the shortfall, but it set me back far more than I expected. Rebuilding my buffers took much longer than I had planned.

That experience changed the way I invest.

Now, before I buy anything, I make sure I have a clear safety buffer in place—not just for my existing properties, but for any new purchases.

It’s not just about how much you can buy—it’s about how long you can safely hold.

What Is a Safety Buffer—And Why Does It Matter?

A safety buffer is money set aside to cover unexpected costs, vacancies, or interest rate changes—ensuring you can hold onto your properties without financial stress.

Without a buffer, even small disruptions—like an urgent repair or a vacancy—can force you into reactive decisions. The right buffer gives you breathing room to ride out market cycles and stay in control.

How I Calculate My Safety Buffers

Here’s my general rule of thumb:

• Aggressive investors – 6-month buffer

• Moderate investors – 9-month buffer

• Conservative investors – 12-month buffer

Your buffer should cover loan repayments and rental-related costs. Here’s what that looks like in practice using one of my own properties:

For me, 6 months is the sweet spot. It gives me protection without tying up too much capital. If my buffer dips below that threshold, I prioritise topping it up—either through savings or an equity release.

How I Fund My Buffers

Releasing Equity

You don’t always need to save the buffer in cash. If you’ve owned a property for a while, a broker might help you access usable equity and park it in your offset account—ready to step in if needed.

Building It Into Your Next Purchase

When I buy, I calculate the full cost of the deal—including the buffer. If I can’t comfortably fund that across my portfolio, I adjust the plan:

• Drop the price range

• Explore different markets

• Delay the purchase

It’s not about playing it safe. It’s about playing it smart—and keeping yourself in the game long enough to build real wealth.

The Real Risk Isn’t Missing a Deal—It’s Not Being Able to Hold

Too many investors stretch themselves thin to secure a property, only to panic later when costs rise or cash flow tightens.

I’ve been there. It’s not fun.

A safety buffer isn’t a luxury—it’s the margin that protects your strategy, your confidence, and your future.

If you’re serious about building a portfolio that lasts, make sure you’ve got one in place.

Because in property investing, it’s survival of the fittest—and the best-prepared.

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