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From: Antoine Hanekom


Is there a "magic figure" or qty, beyond which purchasing investment properties becomes more and more affordable. ie: borrowing using the capital growth / equity of all the properties combined, to purchase more. (snowball) ????
 
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Reply: 1
From: Mike .


Hi Antoine,

Welcome to the forum. To my knowledge this question has never been raised before so I hope you get a few replies.

I don't have a definitive answer one way or the other but I assume no such figure exists because of the many variables involved in purchasing property.

It should be so that as you add more and more properties to your portfolio the increased capital gain on the entire portfolio will provide deposits for future purchases. The amount of properties you will actually be able to purchase will be a combination of the purchase price, the debt the banks will allow you to carry, and your ability to service that debt.

Please be aware that the number of properties in a portfolio is not that important. Sometimes the right strategy may be to purchase a $200K IP and other times $50K IP's will be the correct choice. It all depends on the opportunities you can find in the market at the appropriate time. Keep evaluating your borrowing capacity every 6 months and in the interim look around for good deals. When a good deal comes along, and you know you're financial, you will be able to grab those good deals.

Regards, Mike
 
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Reply: 1.1
From: Sergey Golovin


I guess you might have to find how much do need income not to go to work and spend all your time find, buy and manage property portfolio.
Let say your need income around $100K. you will need may be $1 Mil. worth of property fully paid off?
And then you are away...

Regards
Serge G.
 
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Reply: 1.1.1
From: Samuel Riley


I would rather have $2million worth of property with a $1million debt..

wouldnt everyone? rather then $1million fully paid off.

"success is nothing more then a few simple disciplines repeated every day, while failure is nothing more the a few errors repeated everyday"

Sam
 
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Reply: 1.1.1.1
From: Sergey Golovin


Yep!
That is it.
And then the whole world of possibilities would be open up for you.
But it does not mean that you do not have to work. It is still work, just different kind of work.

Serge G.
 
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Reply: 1.1.1.1.1
From: The Wife


Its working on you're own wealth, not somebody else's.

TW
~Life is a daring adventure, or nothing at all~
 
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Reply: 1.1.1.1.1.1
From: T W


What about if you could find positive geared properties which rents high enough to qualify for loans without the inclusion of other income.

eg. Bank X takes into account 75% of rent and 30% of income when assessing borrowing capacity.

With a bank interest rate of 7%, You find a $100,000 property that rents for $10,000 per year ($192/week).

75% of this rent would be $7500. this is greater than the repayments of $7000 pa (IO).

Would this be possible. Are there any banks out there who would lend to someone without an income in a situation like this. If this could be done you could buy an unlimited number of properties??????

T
 
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Reply: 1.1.1.1.1.1.1
From: Guy Wood


Maybe Terry, but you've got to find someone in the institution who thinks your way, or maybe a sharp broker. I recently missed a property (5 shops & 2 flats in two adjoining buildings) with $21000pa !!income & purchase price $120000 ... the bank was worried about ability to afford repayments!!!??? It inspired me to learn more about brokers, institutions & lending.
 
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Reply: 1.1.1.1.1.1.1.1
From: Rasputin .


wow sounds like some banks are reaally misisng the mark here
 
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Reply: 1.1.1.1.1.1.2
From: Samuel Riley


"You find a $100,000 property that rents for $10,000 per year ($192/week)."

Can someone show me where I can find one of these? Do they exist? I thought you were doing well if you found a 1ook property that rents for $150 a week.

Im not having a go at you T but it seams a bit unrealistic or am I missing something?

sam
 
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Reply: 1.1.1.1.1.1.2.1
From: T W


Sam

There are plently of properties in country areas that give good yields. There was an article in the Australian Property Investor magazine (http://www.apimagazine.com.au/) a few years ago about this. Some examples included one that had a 20% yield! They probably would never go up in value though.

Regards

Terry
 
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Reply: 1.1.1.1.1.1.2.2
From: Miakat .


Sam,

I'm sure there are quite a few people on this forum that have been able to get such returns. My first IP was bought for $128500 and rents for $350 per week. It's also in a suburb experiencing 19% growth. These deals are out there. Once you look in the right places, you'll certainly see them.

Miakat
 
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