property-holding

‘When can I use the equity I’ve generated in a property to reinvest?

property-holdingThis week I’ve received a fantastic burning question from Anne – and the thing I love about this question is that it shows just how much Anne is thinking about her strategy.

Anne isn’t just considering the property purchase right in front of her, but she’s thinking about her long term investment goals – and as a property educator, that is just music to my ears!

So what is Anne’s question? Anne has asked how long she needs to wait, after investing in a property, before she can access equity to use as a deposit on her next investment.

Great question Anne!

In my view, I think that within 12-24 months of investing in a property, you should be in a good position to draw out equity and use it as a deposit on your next property investment.

Here are three potential ways to go about this:

1. Buy at a discount

I’m never a fan of paying full price anyway!

I believe that if you’re going to buy a $300,000 property then you should do everything you can to negotiate hard and reduce the purchase price.

If you can get a 10% discount – and yes it can be done; it happens every day of the week – then you’ll manufacture equity immediately.

Then in 12 months time, you could be in a position to go back to your lender to say: “I bought this property at a discount 12 months ago, and similar properties are growing in value and selling for at least 10% more. Can I access some equity for another property purchase?”

2. Buy in growing suburbs

By investing in a property located in a suburb that is growing in value organically, you’ll be able to access equity within a year or two based on market growth.

How do you find these properties? You need to do extensive due diligence, but it is possible – I’ve personally invested in dozens of them (and so have my students!)

3. Renovate

Another strategy my students will use when they want to manufacture growth and fast-track their access to equity is to renovate.

It might be a small cosmetic renovation, or a slightly larger structural upgrade, depending on their investment strategy.

Either way, it can serve to increase the value of your property and allow you to unlock equity to reinvest.

These are some of the strategies you can use to gain access to your equity within around 12 to 24 months. These are approaches to investing that my students use frequently to create successful results and grow their property portfolio faster.

To Anne and everyone else who has sent in your burning questions – keep them coming!

I love receiving them and we enjoy creating this podcast for you every week, to help you build your own property and finance education!

It’s my view that you never stop learning, and every tidbit about investing that you take on board takes you one step closer towards financial success.

Do you have a burning question? If you’d like to add your query to the pile, please click here. And look out for my 2 Cents reply in an upcoming episode of my 2 Cents Tuesday podcast!

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