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
Buy one, maybe live there and rent out spare rooms, now the renters are paying your mortgage. With the money you save, buy another one. Now the renters are paying your mortgage and living expenses. You no longer need a job, so you can spend more time renovating a third fixer upper from auction or something. Now you are generating income from your rentals, save up and buy another one.
Now you have two for profit properties you don’t need to be as frugal and can pay contractors to do work or have an estate agent take on the maintenance for a cut of the rent. Now you are making money and doing very little for it, you put a portion of it away and continue reinvesting that portion in additional properties, maybe one to live in.
Each property you add to your portfolio makes it easier to buy the next.
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