ByJohnSageMelbourne

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

MichaelYardneyfrompropertyupdate.com.audescribesthatwhatmattersisthevalueofyourassetbase,whichmightbeasmallnumberofwell-selectedresidentialorcommercialproperties.Evenifsomeonehasaagreatdealofresidentialorcommercialpropertiesdoesnotmeanthatthey‘reperformingwellforthefinancier!

InMichael‘sexample,theinvestorhascollected$5millionofwell-locatedresidentialorcommercialpropertiesover10or15years,plustheyowntheirownhome.Ifyouhadatypical80%Loan-to-ValueRatio,youwouldbeadverselygeared.

Ifyouhadnofinancialobligationagainstyourpropertyportfolioandhadpositivecashcirculation,youwouldgiveupthebenefitsoftakeadvantageof.Ifyouhada50%LVR,yourpropertyportfoliowouldbeself-funding,andwhileyoumightgainsomemoneyflow,itwouldnotbesufficienttoresideon.

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Whiletheideaofa$5millionpropertyportfoliowithoutfinancialobligationsoundsgood,it‘sbetterandmorerealistictobuildupa$5millionportfoliowith$2.5millionofdebt.Itwouldpermityoutogotoyourbankandsecureanextra$100,000loan,asyoumightproveyouhaveaself-fundingportfoliothatisn’treliantonyourincomeandhassomemoneyleftoverforserviceability.Inthismethod,you‘reslowlyincreasingyourLVR.

Afterpayinginterest,you‘releftwitharound$93,000annuallytoliveoff,andthat‘smoneyyoudon’tpaytaxonasit‘snotincome.Nowthatimageofastunningretirementisenteringintofocus.

Conclusion
Onelastthingtosayistobeclientandwaitontherightproperty.Don’tgetimpatientandbecomestrainedwithanunprofitableproperty!
Formoredetailsaboutpropertyinvestment,checkoutJohnSageMelbournehere.

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