how do you leapfrog?

Welcome to the forum llewtanner,[thumbsup2]
from memory, Steve initially used saved capital and at a later date was able to use both equity from the purchased IPs and his own home to continue buying IPs. The +cashflow that resulted from these houses allowed him to borrow more money (as he never outrightly paid for a property, just a deposit). Hence the leap-frog expression comes from using what you have in equity (own home, other saving or capital) to put down a deposit + closing costs and borrowing the rest for each house.
For example, you inherit $100K, you could buy one house at $100K and own it outright (no tax consesions) and then pay tax on any of the income from that property, OR you could use that money and buy 5 x $100K properties with a deposit of $20K each- borrow what is left and rent them all out. This gives you Tax consessions (if -ve geared) and the income (rent) would , hopefully cover the running costs of these houses. This is more or less what Steve did (I simplified it) but he ensured that all the properties were +ve geared (income is greater than expenses).
Clear as mud in a beer bottle! Hope this helped.[biggrin]

Cheers

C@34

From Memory, Steve and Dave were living on their wife’s incomes and saving all of the income from their accounting practice which they ploughed into cheap property. In addition they were ‘wrapping’ a lot of the properties and so were getting back a large portion of their deposits which they used for the next round of purchases.

And don’t forget, this was at the start of a large real estate boom so the equity built up quickly.

Terryw
Discover Home Loans
North Sydney
[email protected]