The Equity Tactic For Excelling Your Property Portfolio

by | Jul 7, 2021 | How to Invest in Real Estate, Property Investment

While long term we know that cash flow is dependent on a good rental income, capital growth is the quickest way our property can pay us back. This comes down to having some smart tactics to get the most out of every dollar of value in our investment properties – something we like to call equity lock. 

This is because the one thing we need as property investors, particularly in the acquisition phase of our journey, is access to our money.

The more cash we can lay our hands on, the more properties we can buy and start to get an income from.

Most property investors don’t start out their journey with a big bucket of cash that never empties. The majority of property investors need to borrow money from banks and lenders to get enough cash to buy that first investment.

And the quickest way to buy the next property is to have our first investment pay us back what we borrowed to buy it. In short, we want our properties to pay us back the deposit amount so we can use that money as the next deposit.

WHAT IS EQUITY LOCK – AND WHY IS IT SO IMPORTANT?

Before equity lock, comes equity. Equity happens when your property is worth more than you paid for it. Maybe the average area price has gone up thanks to an improvement in local infrastructure, or there’s a lack of stock so people suddenly need to pay more to live in your location.

Whatever the reason, your property is now worth more than you spent buying it.

Capital growth, as we’ve said before, is a vanity exercise. It’s great to swan around feeling smug that your $450,000 apartment would now sell for $500,000. But unless you do something about it, how does it really serve you?

Equity lock is the one financial tactic that a property investor needs to know how to use to grow their portfolio faster.

Once your property has equity, the smart thing to do (making sure you can still service the loan) is to revalue the property and draw out the increased amount. Property investors then use that cash as a deposit on the next one or two properties, which also yield rent income and capital growth.

IS THERE FALSE EQUITY?

Markets are constantly changing. Over the 20 years that you own a property you can expect the value to go up, go down and plateau. That’s how real estate works.

So, imagine if impacts like COVID-19 or a lack of stock or low interest-rates, push up the value of your property, above what even you think it’s really worth? Even if you eventually lose some of that capital growth and have to wait a few years to get it back, as long as you can service your loan, you still need to act fast and lock your equity in. 

Property investors don’t live on capital growth. The income from rent and regular increases in that rent is what allows people to work a three day week. The more properties you own, the greater the passive income.

Locking in equity means you can buy a second, third or fourth property that much faster, which equates to more passive income.

GETTING STARTED

Let the experts at Positive Real Estate teach you about equity lock and how to make it work for you at one of our free property investing seminars

Sign up for one of our information and education events, where you’ll be equipped with the tools, resources and support to thrive, and not fall behind on your path to financial freedom – whatever that may look like for you. 

Book your spot now and find out what you need to know about the current market landscape and how you can make it work for the ultimate wealth creation opportunities. 

Book here.  

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Turning $80k into $800k

Turning $80k into $800k

Welcome to the first episode of Property Investor Tales – Stories From The Front Yard!

Each week I get to speak to property investors from around Australia about their investing journeys. As the head of coaching at Positive Real Estate, I’ve been fortunate to connect with thousands of investors who have a story to tell. My hope is that from these incredible investors, your own investing journey is made that little bit easier. 

Abe Pasilidis is my guest today and he has an inspiring story to tell. I won’t give too much away but listen out for an $80k investment has turned into $800k, plus a hilarious story of property management gone wrong (when you DIY). 

Enjoy this conversation with Abe!

Once you’ve listened to this episode, I’d love it you hit the subscribe button  so you get notified every time a new episode drops. 

As you can guess I love hearing people’s property investor tales so if you’d like to share yours then please get in touch with me via email at  propertyinvestortales@positivementor.com.au You can watch all of these podcasts over on YouTube at Positive Mentor or at positivementor.com.au
Today, I am talking about some key lessons I learned from Dr. Andrew Wilson, a housing economist and a funny bloke. He is a member of the Chartered Surveyors Community, a wealth of knowledge, and a voice of reason when it comes to real estate investment. I’ve adapted his predictions into my strategies and share them with you today!

The Biggest Lie of Investing Revealed

The Biggest Lie of Investing Revealed

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Today, I am talking about some key lessons I learned from Dr. Andrew Wilson, a housing economist and a funny bloke. He is a member of the Chartered Surveyors Community, a wealth of knowledge, and a voice of reason when it comes to real estate investment. I’ve adapted his predictions into my strategies and share them with you today!

20 Investing Lessons from COVID-19

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A Property Investors Guide To Guaranteed Rental Increases

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My Real Estate Pet Hates

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This episode is about all of the things in the real estate community that piss me off. From investors consulting clickbait on social media to predatorial real estate agents giving themselves fake awards, we are going to talk about everything that is wrong with the real estate industry that you need to know about as a property investor. Hopefully, after listening to this you will be able to avoid some of the most common pitfalls that property investors fall into during their wealth-building journey.

Why Do You Want to be Financially Free?

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Will you survive the emotional roller coaster that is property investing? It takes time, money and commitment to create a portfolio, but sadly most who start out don’t make it, why? Well, let’s Wealth Coffee Chat!

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