Investing with inherited property

Question from NewBoy updated on 23rd March 2012:

I have recently inherited property (freehold) and would like to build a property portfolio. I am new to this and have no idea how or where to start. Could you please provide me with some recommended reading (preferably fairly simple material). Should I get a financial adviser/property broker? Basically what is the best way to proceed? All and any advice most welcome.

Our expert Kris Pedersen responded:

My recommendations would be to look to park the property you have inherited with one bank and set up a revolving credit facility against it to use as deposits on investment purchases. Don't do any further borrowing with this bank. Then use other banks to complete the purchase by providing the remaining funds and taking security over the new purchases. The way this would look is if you are purchasing a $300,000 rental property you would look to take potentially 20% ($60,000) from the revolving credit facility with Bank A and then obtain 80% ($240,000) funding from Bank B to complete the purchase. Try and either buy at a discount or look to add value so that you can top up with Bank B and replenish the revolving credit. You then just continue to repeat this. You will need to watch your serviceability at the same time so feel free to get in contact if you want to see how this works.

Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies.

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