Use Equity To Create Cashflow in 4 Simple Steps!
Equity is an interesting topic when it comes to real estate. Smart property investors know that equity can play a key part in creating passive income that accumulates over time, allowing us to eventually work less and ultimately do more of what we love.
But in order to be able to use equity to create passive income, there are some important steps property investors need to take right at the beginning of their journey.
STEP 1: QUALITY IS KING
As property investors we want our acquisition period, the time when we are buying our properties and building up our portfolios, to be quick. The faster we buy our properties, the sooner we can start making enough passive income to achieve our goals – whether that’s a new car every year, a shorter working week or early retirement.
But, simply because we want our buying period to be fast, that’s not a reason to buy any and every property we see. Quality is king when buying real estate.
And, it’s not just quality of the physical building or structure. It’s also quality of location, and quality of the kind of tenants you’ll attract and rely on for regular rent increases.
Making sure your properties will start to gain equity i.e. increase in capital value, depends on the quality of:
- what you buy
- where you buy
- who you rent to
STEP 2: STRUCTURE YOUR FINANCES RIGHT
Knowing that your properties have equity and watching as they increase in capital growth, is an amazing feeling as a property investor.
But, if the way you have structured your loans means you can’t access, or can’t afford to access, that cash, it’s a vanity project. Nice to look at, but a bit useless.
Equity is only going to benefit you, in terms of cashflow, if you can access it.
If you don’t understand finances and loan structure, and need some help and advice, seek out the experts and get some coaching to ensure you’re starting your investor journey in the right way from the beginning.
STEP 3: BUY WELL, DON’T SELL
One of Positive Real Estate’s mantras – buy well, never sell.
If you think the only way you can access equity in your property is by selling it, not only are you wrong, you’re also about to lose a lot of that value to the selling agent and the government in taxes. Whatever you have left will go into a savings account, where you’ll earn a pitiful amount in interest. Selling to access equity makes no sense.
Property investors know they need to retain their real estate for up to 20 years to allow that property time and space to go through the cycles of the market and reach its full potential.
STEP 4: KNOW YOUR NUMBERS
Real estate is a numbers game. From the start we have to know how much money we need to create the life we want to live. Then we calculate how many properties we’ll need and how much rent we’ll earn, to create that income.
Equity is the same. The value of your property has to be high enough (we recommend no lower than $3 million) for equity to be able to act as cashflow. Too low and it’s not appropriate.
Also, taking too much equity value (more than 2 per cent) out of your properties is going to leave you vulnerable.
Seek out some expert coaching and advice from people who know their numbers and can help make equity act as cash flow for you.
GET STARTED FOR FREE
Talk to the experts at Positive Real Estate about where to begin. Our team have decades of experience, about how to borrow, buy and use equity in the current market.
Join our free property investing seminar.
Getting started now means you’ll have the ability to create the future exactly how you envision it to be.
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Best of ’21 #3 Why 99% of People Fail In Real Estate
Welcome to the BEST of ‘21 series on the podcast! This is week 3 of my four week holiday – and I can’t wait to bring to you my predictions for 2022 in the coming weeks. For now, here’s one of the most downloaded episodes of 2021.
Only 1% of people really succeed with real estate investing. So why do 99% of people fail – and what do you need to do to ensure you’re not one of them? If you own real estate already, today’s show just might burst your bubble. We explore property management and reveal what type of buyer you actually are. Nobody really wants to own anything, because when you own something you have to be accountable for it. So in this episode, we will talk about how to navigate the property owning journey. Because often the conversation in real estate is centered around buying and selling. But what about the big part in the middle? Welcome to Episode 78 of the Urban Property Investor!
From Renting At 16 To 3 Properties By 25 with Laura Chugg
Laura Chugg first started paying rent from the age of 16. Ever since then – out of necessity to begin with – she’s been magnificently obsessed with managing money smartly. From the early days of earning $5.88 per hour to now coaching and helping people invest in real estate, Laura has seen a wave of change and growth. With investment properties in her portfolio that have quadrupled in value (buy well never sell), and a raft of lessons learnt along the way, Laura shared with us some of her most powerful Property Investor Tales.
Best of ’21 #2 The Secret Language of Real Estate
Welcome to the Best of 2021 – Urban Property Investor style! Today’s episode – the Secret Language of Real Estate – was the SECOND most listened to episode in 2021, and it’s a doozy!
There is a secret language to real estate that most investors do not know. Knowing that most real estate is not worth touching, how do you then listen to the “secret language” of properties that are desirable. This episode explains this secret language so that you buy desirable real estate that will not only provide quality housing to people, but help you crack the code of real estate. Enjoy!
Cleaning Up a Messy Portfolio with Rose Pengilly
Rose Pengilly had done a lot of real estate investing before getting professional coaching with Positive Real Estate. In her own words, Rose felt like “a bit of a mess” with “no real plan”. “I was just doing my own research and I didn’t have any professional coaching.”
Rose shares the challenges of a messy portfolio, and also the challenges of cleaning that portfolio up. After purchasing three pieces of real estate in Brisbane, Sydney and Melbourne, Rose shares the anxiety and lessons from her experiences.
This is an incredibly honest and real conversation from a successful property investor, and one that anyone – beginning, intermediate or advanced investor – will be able to relate to in one way shape or form.
Best of ’21 #1 How To Borrow More Money & Master Finance
Welcome to the BEST OF ‘21 series for the Urban Property Investor!
Episode 33 was THE MOST DOWNLOADED Episode of 2021 by far. You voted with your earbuds! So if you’re new here, this is the one that everyone wants … and if you’ve already listened – then I reckon you’ll pick up some more nuggets the second time around.
Here’s what I said at the time –
Do you want to beat the banks at their own game? In this episode, I want to show you how to master financing your property portfolio. Yes, finance is the key to capital, and the more you can borrow sensibly, the faster you get to crack the code of real estate wealth.
From Low Income Single Mum to Investing Queen with Carolyn Weston
Carolyn Weston has always desperately wanted to invest in real estate. Growing up in a modest family, she didn’t believe that hard work would necessarily be enough to create wealth. In her marriage, she was constantly rebuked for wanting to invest. After separating, her low income, marital status, and two young children made it extremely difficult to get a loan. But that didn’t stop her.
Not only did Carolyn make some incredibly tough decisions in order to enter the investment market, she has stuck to the task for over 10 years to the point where she is now one of our coaches at Positive Real Estate. A single mum who couldn’t afford becoming a client of PRE to begin with, to now being one of our team and a mentor and coach to so many Australians who enjoy the riches of Carolyn’s experience.
My 2022 Real Estate Predictions
This is the last show of 2021, and what a year it has been. We had lockdowns, vaccinations, hysteria, and massive changes in the real estate market. And now we are left in a pretty bizarre place as real estate investors as we go into 2022. So what can we expect from the upcoming year? That’s why we are dedicating the final episode of the year to 2022 predictions.
2 Properties in 6 Months at 31 with Melissa Cowan
Melissa Cowan is 31 with two investment properties. After buying her first IP off the plan, she very quickly purchased her second. How did she do it? It’s a great story of risk management and understanding your threshold for stress. So many of my previous guests have said “I wish I started investing earlier” – well here is that investor – and what a great story it is.
Once you’ve listened to this episode, I’d love it if you hit the subscribe button so you get notified every time a new episode drops.
13 Ways To Create More Cashflow
This is the Christmas edition of the Urban Property Investor. Is your portfolio set up to handle market kryptonite? On this episode, I discuss 13 ways to get more cashflow. From spatial transformation to hotelification, this episode will get your imagination buzzing over the Christmas period. This is one of the best lessons I can possibly teach you, so I am giving it to you as a Christmas gift, whilst I’m swimming with turtles on Lord Howe Island.
Buying The Wrong Properties & Still Winning with Dani & Craig Skinner
Dani & Craig Skinner have an incredible life and investing story to tell. Dani was born in Ghana and grew up in Zimbabwe, and met Tahree-born Craig in Newcastle before they courted in Sydney, got married, and moved to Brisbane.
Before I knew of Dani and Craig, they had already purchased four investment properties. But they weren’t happy with their portfolio, which was a mix of older real estate in low performing areas. But having the wrong type of real estate didn’t stop Dani and Craig from keeping their eyes on the prize. Having felt like the bank “owned” them, Dani and Craig transformed their portfolio into higher performing assets and now have a sensational range of assets that is helping achieve their family, financial and lifestyle goals.
You can’t help but be inspired by this power team. Enjoy!