Hello to everyone….i am new so any information you can provide would be greatly appreciated.
Im just wondering , to all those that have 4 , 5 6 etc number of properties , did u need to take out multiple loans to fund these seperately , or were they saved up very quickly and then property purchased on.
I ask the question as im very keen to build my property portfolio, Im just astounded as in a year i could possibly save 35-40K (just enough for a deposit) , but yet read people buy 6 7 or 8 propertie in a year? With what funds is my question? Is it loans or do they save more than me? Is there something im missing? If anyone can enlighten me on any tricks , techniques or real life stories in enabling me to grow that would be great.
Definately can see the benefits of positive cash flow and making a little profit on your loan repaymnet , but is there a limit on the number of loans i can take or am i looking at this through my inexpireinced head and totally the wrong way.
Look forward to any feedback , thank you for reading
Tony,
Welcome. I think you need to look at what you want to achieve before you set up a loan structure – I now wish I had done this before buying our first. Maybe speak to a mortgage broker about what your goals are and they can help you set up a finance structure from the beginning.
As for how to buy 6, 8 etc properties in one year. I think you will find that most people do not save as much, or more than you. Last year we purchased 2, this year 1. We have done this by using the equity in our current properties to fund the deposits. The biggest thing is to get in and buy that first one, then save to help fund the second while you are also getting capital gains. If you have a few properties then the deposits come a lot sooner, especially if you are using positive cash flow.
I hope this helps,
JLJL , very much appreciate your advice……. thank you
JL or anyone
can i ask after you raised the equity for the deposit , was the remining of the property purchased with a loan…….is the trick to try and keep the actual loan , (especially now with interest rates booming like thay are) to a minumum….???
Any advise would be great
Tony,
It really depends on what you want to achieve. I would really recommend you find a mortgage broker, financial planner and accountant you trust to help you with this kind of info.
Remember when interest rates where at 6% and not much was anticipated to change for a long time. How things have changed. A wise person at this time said to me if you can't afford it at twice the interest rate, you can't afford it. Not surprisingly, we are not far from that statement.
What I'm trying to say, if you think the interest rates are high, and will get higher, then maybe you want to pay down debt. There is no point in being financial free if you can't function properly because of stress due to interest rates.
My advice, do your homework about location, do your pest and building checks and don;t necessarily trust the agent about expected rental returns, (although I'm sure there are some that are reliable) and most of all enjoy the process. This should see you through the more challenging times, and if not, what is the worst that can happen – you have to sell!!!!
Kind Regards,
JL.
PS Tony I would also suggest that you read, read, read. The greater your education the better decision you can make for your circumstances.
And yes, we borrow – as much as we can!!!Tony
JL is correct that the first hurdle should be assessing your borrowing capacity and setting up your structure to ensure the loan you take out can grow with you at the pace you wish to grow.
To expand your portfolio rapidly you will need a combination of serviceability and price increases to create equity.
Dont be in a hurry to buy buy buy but remember the rule of 72.
If you take an Asset / Porfolio and divide the anticipated annual rate of return / 72 this will give you the number of years you can expect for your asset to double in value.
Assume you have a house worth $100,000 with a 95% borrowing and the property is going at 8% PA.
This means in approximately 12.5 years your $100,000 property would now be worth $200,000 althought the loan would still
be on $95,000.You have gone from little or no equity to having over 50%.
Along the way you would use the available equity and build your portfolio.In saying all of this if it isnt constructed correctly initially then it will be an expensive mistake to correct.
Richard Taylor | Australia's leading private lender
Richard,
Isn't that 9 years to double in value?
72 / 8 = 9
Marc
You are absolutely bang on.
Comes of typing a reply whilst i popped in from cutting the grass in the dark and rushed off as the mower was still going.Whew thank god i am not in finance…….oh help i am…. pass the calculator i dont have enough fingers.
Richard Taylor | Australia's leading private lender
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