A teacher has revealed how she managed to buy three homes on a $70,000 salary and how she plans to purchase even more properties.
Monica Rouvellas, 34, is the proud owner of three properties that are worth an eye-watering $1.2million.
She has built her impressive property portfolio after spending years struggling and failing to secure a personal loan from the banks on a teacher’s salary.
Ms Rouvellas lifted the lid on how she was able to turn her fortune around by making a slight adjustment when applying for a loan.
Monica Rouvellas (pictured), 34, bought three homes worth a total of $1.2m despite the fact that she only earned $70,000 per year at the time
Ms Rouvelllas spent $25,000 of her savings renovating her first property (pictured) which allowed her to increase the rent by $100 per week
She created a company and then set up a special purpose vehicle, a separate legal entity that can be set up for a specific business purpose.
They are subsidiary businesses of the parent company and have their own assets and liabilities.
They can be used to take on greater financial risk while protecting the parent company.
Ms Rouvellas purchases her homes through the special purpose vehicle.
The banks have been happy to provide her with a loan through her company because of several extra risk protection safeguards that are available to businesses.
‘One thing I learnt is that banks treat you differently if you take out lending products as a business,’ she told realestate.com.au.
Ms Rouvellas has rented all three of her properties at a price which covers their entire repayment cost, and she plans to buy five more this year.
Ms Rouvellas, who is now a lecturer at Macquarie University, first considered buying property along the NSW south coast in 2016 but was denied loans when banks said the self-employed music teacher didn’t have enough income.
After being declined several times, she and her brother went 50/50 in the special purpose vehicle and they were able to buy the unit for $350,000 with a 10 per cent deposit.
‘You have the backing of the Corporations Act so the banks have more alternatives if things don’t go well [and] you also get more asset protection benefits and there’s more ways to minimise your tax,’ she said.
Ms Rouvelllas spent $25,000 of her savings renovating her first property.
The 34-year-old and her brother then learned the house was worth $100,00 more than the price they had paid.
Using the leverage of this reevaluation and benefiting from rapid equity gains by buying in the right location at the right time, the property’s rent increased by $100 per week.
Ms Rouvellas claimed that these increases to her profit covered not only the mortgage bills and the council rates, but also decreased her total debt by hundreds of thousands thanks to the equity she held.
Ms Rouvelllas bought another unit on the south coast of NSW (pictured) for $215,000 which increased in value by $85,000 in just over six months thanks to her formula
Ms Rouvellas, who is now a lecturer at Macquarie University, was denied loans when she was self-employed in 2016
Drawing from the business and law that she was studying at the time, Ms Rouvellas began restructuring her portfolio using business structures after banks rejected another personal loan.
‘After that first property I tried to get new loans from banks for another property but had a problem,’ she said.
‘They said I had no serviceability left.’
After successfully using the special purpose vehicle again, Ms Rouvellas bought her brother out of the venture and purchased her second property.
She bought another unit on the south coast of NSW for $215,000 which increased in value by $85,000 in just over six months thanks to her formula.
Her third property in southeast Queensland.
‘I do a lot of research to look at which areas are going to grow and where the rents will be high,’ she said.
‘My advice for anyone [investing] is to get advice on structuring your loans.
‘It makes all the difference.’
Source: | This article originally belongs to Dailymail.co.uk