Build Your Property Portfolio

ByJohnSageMelbourne

Thinkaboutbuildingastrongcollectionofhighdevelopmentpropertiesandloweringyourloan-to-valueratios(LVA).Here‘showitworks:

MichaelYardneyfrompropertyupdate.com.auexplainsthatwhatmattersisthevalueofyourpossessionbase,whichmightbealittlenumberofwell-selectedhomes.Simplyduetothefactthatsomeonehasaagreatdealofpropertiesdoesn’tindicatethatthey‘reperformingwellfortheinvestor!

InMichael‘sexample,thefinancierhasactuallyaccumulated$5millionofwell-locatedresidentialorcommercialpropertiesover10or15years,plustheyowntheirownhouse.Ifyouhadatypical80%Loan-to-ValueRatio,youwouldbenegativelytailored.

Ifyouhadnodebtversusyourpropertyportfolioandhadfavorablemoneyflow,youwouldofferupthebenefitsoftakeadvantageof.Ifyouhada50%LVR,yourpropertyportfoliowouldbeself-funding,andwhileyoumaygainsomecashflow,itwouldnotsufficetoliveon.

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Whiletheconceptofa$5millionpropertyportfoliowithoutfinancialobligationsoundsexcellent,it‘smuchbetterandmoresensibletoaccumulatea$5millionportfoliowith$2.5countlessdebt.Itwouldpermityoutogotoyourbankandsecureanadditional$100,000loan,asyoumightproveyouhaveaself-fundingportfoliothatisn’treliantonyourearningsandhassomecashleftoverforserviceability.Inthismethod,you‘reslowlyincreasingyourLVR.

Afterpayinginterest,you‘reentrustedtoaround$93,000annuallytoliveoff,andthat‘smoneyyoudon’tpaytaxonasit‘snotearnings.Nowthatpictureofagorgeousretirementisenteringfocus.

Conclusion
Onelastthingtostateistobeclientandawaittherightproperty.Donotgetimpatientandbecomestrainedwithanunprofitableproperty!
Formoredetailsaboutpropertyinvestment,checkoutJohnSageMelbournehere.

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