[FrugalOneMember@frugaloneJoin Date: 2010Post Count: 16]

June 20, 2010 - 10:59 am

Qlds007 wrote:

Yes there would be but they would secured against other properties.

You would still be 100% geared.

There is something that I am missing here. The strategy that I propose won't use any debt – at least that's what I'm asking – is it possible? If you have a pile of equity how much of it can you use to "purchase" another property? My strategy involves using as much equity as possible to avoid lending.

[FrugalOneMember@frugaloneJoin Date: 2010Post Count: 16]

June 20, 2010 - 10:25 am

Qlds007 wrote:

In fact as long as you have the equity and serviceability you could use property 1 as security for all loans as long as the lvr is less than 80 -90%.

And there would be no loans at all, as you "own" all the properties?

[FrugalOneMember@frugaloneJoin Date: 2010Post Count: 16]

June 20, 2010 - 9:50 am

Thanks for the reply Greg. Can I take the questions up a notch?

Considering your response, I have considered the following property aquisition strategy and would like to know if it would work how I'm thinking it might. It is different to my previous questions, and mainly aimed at "owning" property for little outlay except for completely paying out/owning the first property. Basically it involves using a very large/all of the available equity in one property to build from, and not being in any debt.

Let's say I own a $300000 property outright. I see a second property valued at $200000 that I would like to purchase. $200000 being well under the 90% or even 80% of using available equity in a $300000 property, can I purchase the second property entirely using $200000 of equity in the first property? There will be no loan, because I haven't borrowed any funds? If so, can I do that with a third property? Say I wish to purchase the third property valued at $100000, and I now "own" the second property valued at $200000. Given that $100000 is well and truly within the 90% or even 80% of the $200000 equity in the second property, can I purchase the third property entirely using the available equity in the second property, and hence have no debt attached to the third property?

And in owning the three properties, there are no debts at all? The rent income from the three is not needed to service any debts?

Sounds a bit to good to be true, so that's why I'm asking

[FrugalOneMember@frugaloneJoin Date: 2010Post Count: 16]

June 14, 2010 - 8:24 am

Thankyou for your interesting response Paul

[FrugalOneMember@frugaloneJoin Date: 2010Post Count: 16]

June 11, 2010 - 8:49 am

Noone?

[FrugalOneMember@frugaloneJoin Date: 2010Post Count: 16]

June 6, 2010 - 11:49 am

Thankyou for the helpful replies! Happy to hear that a "lot" of equity is not needed. I appreciate and agree with your opinions that although this is the case I still does not mean you should use it…and even then, how you should use it.

I assume a professional property valuation is the first thing to do if someone plans on approaching a lender to borrow more funds, as this will allow them to consider the up to date LVR?