math & dynamics behind multiple properties in a everchanging changing housing market ?

Discussion in 'Property Market News and Trends' started by menno, Apr 12, 2018.

  1. menno

    menno New Member

    Hi,

    Lets say I have 2 properties, both bought in a lowprices period;

    I am renting out the smaller property as a side info
    As now the market in my country is turning out good, I could sell one of the properties.
    But the thing is; In order to keep investing, I would have to buy another hi-priced property, so I might as well just keep it..

    Now my question is, are there any strategies known to "spiral" out of this market dynamic ?
    Are there ways to use, having multiple properties, to one's advantage ?

    I have been thinking, if I sell the smaller property in a hi-prices period, I might pay off the bigger property,
    But does this actually add any extra value/capital ?
    One thing is for sure, if I wait for a low priced period, I will not be able to pay off the bigger property with the
    smaller property. But what does this tell me ? nothing really .. I could also just put the money on the bank
    instead of paying off anyway, right ?

    Ok any thoughts and expertises are welcome !!
     
  2. diyhelp

    diyhelp Active Member

    Patience is key here - use the rental income on both properties to pay off the mortgages. When there is sufficient headroom simply use equity in the properties to raise funds for a deposit for another property, using rental income from that property to pay off the new mortgage.

    Where you have rental income which covers mortgage payments (and general upkeep) there is no point in paying the mortgage off. Do not be scared of debt as it allows you to leverage your position to your long term benefit. However, always leave yourself some financial headroom in the event that markets turn down.
     
  3. Longterminvestor

    Longterminvestor Active Member

    Many people are afraid to make full use of debt which can, if managed correctly, significantly speed up the process of building a property portfolio. This does not mean taking undue risk - just appreciating the cost of debt against the income it can create and any long term potential for capital gain.
     
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