These people tend to tell that the key is to use capital that’s not your own – like from a bank. I understand how it works with common mortgage. But let’s say I already have a mortgage, thus own one property/real estate. Now I’m in debt towards the bank and they’re not giving me another loan to buy another flat since I need to be repaying the first one (?).
So, how does it work? Where do these people get the needed money to buy the second property? The third one?
In: Economics
>But let’s say I already have a mortgage, thus own one property/real estate. Now I’m in debt towards the bank and they’re not giving me another loan to buy another flat since I need to be repaying the first one (?).
That’s assuming you are living in the building you are paying the mortgage on with no additional income. But if you are renting it out. Assumably, for more than your mortgage payment, getting a new mortgage doesn’t have the same risks to the lender.
A lender is going to be looking at your income stream. Collecting rent on a property is income. And if you have enough equity in your property/ properties, you can get loans just on that equity.
One way to get started is to build up enough equity in a property to take or a loan against that equity and use that loan to make a big downpayment in a new property, thus having a snake loan. Then renting out that new property, increasing your income. Then, use your regular income and the new rental property income to pay down that loan, building up more equity. Then it’s just rinse and repeat.
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