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When you start investing with a specific goal of creating long term wealth the early stages know as the Asset Accumulation Stage can sometimes happen in the first 1-5 years. You can go from 1 property to 3 very quick. In order to make this accumulations stage fast asset selection is very important which is either your owner occupier or first investment property. If you over pay for a property or buy in a market thats declining or flat then it’s going to be difficult to move towards owning multiple investment properties.

If you buy a property under market value you create instant equity like the below purchase the first house was valued at $450,000 and the vendor settled at $400,000. In a hot market the house quickly grew in value by an additional $50,000 and after 12 months it was revalued at $500,000. This meant they generated $100,000 in equity in 12 months. This is the power of leverage and compounding.

The below example is how one investor was able to turn $40,000 (his first deposit) into 3 properties. By refinancing the 1st property at 90% Loan To Value Ratio and used $90,000 of the equity to purchase two investment properties.

People think you need a lot of money to own multiple investment properties. In fact you don’t you just need cash or equity to get started then use the banks money in the form of leverage. Again though you must buy the right properties that’s going to recycle your money back to you to invest in further properties. Well balanced properties where the rental return covers all your expenses means you are sitting on a large growing asset base without having to dig into your pockets.