Are you ready for this?

I will take you through the steps on how to build a $2 million portfolio from the ground up.

STEP 1. Buy That First Property

As discussed earlier the hardest bit is getting that first property. Let’s say we start by buying a $400,000 property with a 90% loan of $360,000 from Bank “A” as our first property.

STEP 2. One Becomes Two

Now with the hardest part done, we have waited for the property market to work its magic and the value of the first property has grown to $500,000 and the rent will have increased too. Now we know that the banks will lend us up to 90% of the value of a property so our new “90% line” is at $450,000. So if our mortgage is only $360,000, we have up to $90,000 in available equity we can access to get us to our next property.

Now we simply go to Bank “A” and ask for a second loan of say $60,000 against the first property. We can afford extra debt on that property because we are now receiving more rent. We use the cash from that loan to pay the deposit and costs on our next investment property.

Then we ask another lender “Bank B” to give us a loan for 90% of the new property. So one property has now become two without using any of our own cash.

STEP 3. Two Becomes Four and So On

Let’s say we did our homework well and it took two years for our first property to increase in value to such a point that we could leverage another property off the back of it, and one property became two. So then another two or so years later we can expect our two properties to continue to grow, and then two become four! Another cycle later four become eight, eight become sixteen and so on.

So now you know how to build a $2 million portfolio rather quickly and can appreciate how some property investors manage to accumulate massive property portfolios. You see property portfolios don’t grow at the same rate. They grow exponentially (one becomes two; two become four; and so on). You add properties faster and make money quicker the longer you have been doing it. The hardest bit is just getting that first one! So if you’re not in one yet, start doing everything possible to do so!

I have been asked what I would do if I had to start over again from scratch. The answer is always this: I would get a job. I would rent the cheapest accommodation I could handle. I would drive the cheapest car I could. And then I would save every last cent I could until I could scrape into my first property. Then I would buy that property in the best boom location I could find, and let the property market do the rest. Because I know after that I will be fine!

Join me tomorrow when I share another trade secret “Try not to use the same bank!”

~Daimien Patterson

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Legal Disclaimer: This information ('the information') is presented for illustrative and educational purposes only. It is not presented nor should it be treated as real estate advice, legal advice, investment advice, or tax advice. All investments involve risk and potential loss of money. If you require advice in any of these fields you should contact a suitably qualified professional to assist and advise you. Your personal individual financial circumstances must be taken into account before you make any investment decision. We urge you to do this in conjunction with a suitably qualified professional. Daimien Patterson, IntegrityX Enterprises Pty Ltd, and their associated trading names, companies, researchers, authorised distributors and licensees, employees and speakers do not guarantee your past, present or future investment results whether based on this information or otherwise. Daimien Patterson, IntegrityX Enterprises Pty Ltd and their associated trading names, companies, researchers, authorised distributors and licensees, employees and speakers disclaim all liability for your purchase decisions. You should do your own independent due diligence and seek the advice of qualified advisors before making any investment decision.