First look for a property that is well located and can be acquired at a good price. Now go to your financier and get a loan for 80-90 percent of the value of the property.
The next step is to add value to the property by renovating it or refurbishing it or by redeveloping the property (say, by getting developmental approval for multiple units on the site).
You have now added value to the property and if renovated or refurbished you can then increase the rent collected since you have improved the property.
With a tenant paying better rent and a now improved property you then can get your property re-financed, because it will bring in a higher evaluation. This may have to wait for a period of six months, however, before banks will acknowledge the increase.
Now you can take out the extra monies left over from paying off the first loan and use it to put a deposit on your next investment property.
One idea is never to sell. That way you get the benefit of the long-term capital gain.
By re-financing and recouping your deposit and most if not all of your refurbishment costs, you are in effect using the same money over and over again to buy and develop a series of properties.
Servicing your mortgages is your main concern but because the properties are improved along with higher rents being achieved and good depreciation allowances you will have a lower net cost of ownership.
If you would like to view some investment properties feel free to phone me, Noel Thompson Principal of Professionals Logan Lifestyles on 0418 517 525 or call into our offices at Browns Plains or Waterford for immediate assistance.
http://www.llr.com.au
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