How to Finance a Property with No Money

Using the value that you have acquired in your property since the time you originally purchased, can be of great assistance in helping you to acquire new property assets with little or no contribution from your own resources. Depending on income, you may be in a position where you don't need to contribute any of your own funds to purchase a new property.

On average, Melbourne property prices have increased 7% - 10% pa over the last 20 years. The amount of increase varies by location but you can generally expect your property to have doubled in value if you have owned it for 10 years. So a $250 000 purchase in 1999 is likely to be worth around $500 000 in 2009.

The objective in purchasing an investment property is to keep you loan to valuation ratio [loan amount divided by the value of your property] below 80%. Your existing equity can assist in achieving this.

Key benefits that assist in reducing the cost of an investment property to you are:

1. Rental income which assists you in paying off the new loan
2. A negative gearing benefit which factors in tax benefits that accrue where the interest repayments on your loan are greater than the rental income you receive
3. A depreciation schedule that will also give you tax benefits. This must be prepared by a quantity surveyor. It's estimated that 80% of property investors don't take advantage of this according to property writer Lisa Parker

Owning an investment property that leverages these factors, minimises the amount you need to contribute on a weekly or monthly basis.

Low interest rates, very low rental vacancy rates and increasing yields along with stable property prices provide a great opportunity to make a start on or extend your property investment portfolio

To assist with developing and implementing a sound property investment strategy, it's important that you have a good accountant to assist you in maximising your eligible tax benefits.