This is something I personally wish I did when I had my 1st property. Eager to get a residential following this, I ended up selling it quickly for much lower than it was valued.

The uplift in value from buying it cheap in the first instance along with the small redesign I did would have been enough to refinance some money out to use towards the deposit for my 2nd property.

Sadly I was new to the game and only learnt this the hard way.I have done this successfully and shared on a few videos in the past. However if you can’t be arsed to check here is some more context on the numbers above:

1. Refurb or add value to your 1st property. Note: Every property has a ceiling price so simply spending money on it won’t necessarily increase in the value. But if you can find ways to add value through creative means, or renovations to bring it to the standard of local properties this will work.
2. Get your 1st property revalued showcasing the uplift in value. This is key when it comes to refinancing, post 6 months (as this opens you up to most lenders). By showcasing comparable of similar properties with higher values you increase the likelihood of getting your property valued at a similar or higher amount.

3. Refinance your 1st property based on the new valuation and release the equity gained. When you release cash from a refinance, note that your current costs will increase, but if you can utilise those funds for a 2nd property & the numbers work it’s a no brainer.
4. Use these funds as the deposit for your 2nd property. Refinanced funds being used for assets that cashflow is a no brainer. Do not just leave it in the bank, as your overall costs increase.
5. You now have 2 properties and don’t pay tax on the monies released from the refinance. You do not pay tax on debt.