How Do People Buy Multiple Properties? (Ep42)


Buying multiple investment properties is one
great way to achieve financial freedom and financial success. Today I’m answering a readers
question, how do people buy multiple properties. Hey I’m Ryan Mclean and I’m from positivecashflowaustralia.com.au.
How do people buy multiple properties, very small percentage of the Australian population
will actually go ahead and purchase more than one investment property, and even a smaller
portion of the population will purchase more than three investment properties?
On the surface it seems very difficult when we look at the statistics for any of us to
achieve great wealth through owning multiple properties but it can be done and people do
it, ” How do people buy multiple properties?” Well firstly they start with one, buying multiple
properties doesn’t mean that you need to buy 10 properties in the first year or a 130 properties
and three and a half years just like Steve McKnight did, all you need to do is start
with one, but when you purchase your first property you need to have your investment
goal in mind. Property is a vehicle for success, just like
a car is designed to get you from point A to point B property is designed to get you
from point A to point B financially, you need to know where you want to go financially before
you hop in that car or start investing in property, that you can buy property that will
actually lead you towards your financial goals. A mistake that a lot of people make is that
they go ahead and then look at one, two or maybe three properties in the area and bam
they buy the property straight away without doing the finances, without looking at the
cash flow, without researching the suburb in more detail and looking at where it’s going
in terms of capital growth. They purchase the property emotionally and
they don’t do it based on the financial figures of the property, it’s very important that
you start to understand, what are properties finances look like and what types of property
are going to deliver you the financial outcomes that you want.
If you are investing for financial freedom then maybe a positively geared property is
going to best for you, if your goal is to accumulate a large portions of equity in wealth
very quickly well then properties with high capital growth potential might be good for
you, or if you want instant equity or maybe you want depreciation then maybe new build
properties are going to be more suited to you, depending on your financial situation
and your investment goals the property you purchased is going to be different.
Once you’ve purchased your first property now it’s time to look at well how do we purchase
our second property, there tends to be two ways that people do this; One is you that you continue to save your
deposit in the same way you did for your first property, now obviously saving a deposit is
very hard, I do have some tips which I will link to on my website but you can save your
deposit all over again and invest for a second property, if you purchase a positively geared
property that spins off extra cash flow then maybe you can use that cash flow to save your
deposit even faster. Another way to purchase your second property
is to leverage the equity that you’ve gained in your first property through either adding
value or through capital growth that has occurred because of the market. If you have a $300,000 property and it’s now
worth $500,000, and your loan is still $300,000 well there’s two $100,000 in equity that is
untapped and the banks will allow you to borrow up to 80% of that without incurring lenders
mortgage insurance maybe you can borrow an extra $100,000 which takes you up to 400,000
and you can then use that 100,000 as your deposit on your second property. After the second property really just does
become rinse and repeat, it’s a matter of focusing on your portfolio trying to maximize
the returns that you get in terms of cash flow in capital growth, and then reinvesting
your profits back into your portfolio to grow it even faster, I have heard from other investors
that once you get quite a few properties maybe its three maybe its five, then the doors swing
wide open for you, it’s much easier to get lending and things just become so much simpler. Getting from that two to five mark can be
difficult because you will have reached the peak of your borrowing capacity as a professional,
as an individual and then the banks will start to look at your portfolio and how the portfolio
performs for lending criteria in the future. I hope that this has helped answer your question
how do people buy multiple properties, it really just does to come down to knowing your
financial goals, buying properties that line up with those financial goals and then leveraging
the profit that you gain to expand your portfolio or saving more deposit from the income that
you are generating elsewhere as well. I’m Ryan Mclean you can get more videos, podcasts
and articles like this by heading over to the website, just go to positivecashflowaustralia.com.au
and I will see you in the next episode.

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