I have an overall goal. It's basically to find a property (vacant land or house), demolish, subdivide in half, and build 2 houses. I want to know if my thinking for funding this project is correct. I'll use rounded numbers and make it very very basic to make things simple.

Say i purchase a run down property for 250k with a 50k deposit. I demolish it (15k) and subdivide it (25k). So my loan would be 200k and i have already spent 40k out of my own pocket to subdivide it. Then i build house #1 on the first half of the block using a loan extension which costs 200k. This increases my total loan to 400k. Then i get the entire 2 blocks valued and it comes back at:

- 350k for house #1

- 150k for the vacant half of the block

This gives the assets a total value of 500k giving an equity of (500k minus loan balance of 400k) = 100k.

Now, obviously, i can't use that equity to build house #2 because it's simply not enough. Would i be able to do another loan extension of say 100k so that i'll have a total of 200k (equity + loan extension) to work with? This would therefore increase the total loan to 400+100 = 500k.

Say i was able to do this and house #2 gets valued at 350k as well. This would give a total value of 700k for the 2 new houses. So now the equity is 200k. Is that then usable to buy the next property?

Is my thinking correct?? Or am i dreaming? Is this how investors end up getting many properties over time?

Thanks, and apologies if this has been answered already.