How can new investors take advantage of equity?

In a recent video, pReal estate investor and YouTuber PK Gupta addressed those who are new to real estate investment and whose main residence has increased in value.

Since house prices in Australia have increased over the past 12 months, this basically refers to a good number of homeowners in Australia at the moment.

“A lot of people don’t realize that you don’t have to sell a property to get the opportunity. What you can do is refinance or withdraw equity, ”said Gupta.

Here are the four steps to building wealth through real estate using equity, according to Gupta:

1. Know the equity in your residential property

“You could live in Melbourne or Sydney and live in a property you bought five years ago for, say, $ 500,000 or $ 800,000. Now it could be worth a million dollars. How can you use this to build wealth? ” he said.

Mr. Gupta suggested that you go to a bank or mortgage broker to request an appraisal of your home. According to him, they will do it for you for free. To determine the equity in your home, your mortgage balance will be subtracted from your current home valuation.

2. Refinance your home

For example, the bank or broker says your home equity is $ 300,000. You can use this equity to take out a loan from a bank.

According to the investor, you could hypothetically receive a loan of $ 200,000 based on your equity of $ 300,000.

3. Use your equity to make your money work

Based on the above assumption, Mr. Gupta estimated that such an amount is “enough to buy you two or three properties under $ 500,000 worth $ 1 million in good locations.”

From a loan of $ 200,000, you could have access to a million dollar real estate portfolio. He said that in five years your portfolio could increase in value.

According to Gupta, it is reasonable to expect growth of up to $ 500,000.

From his point of view, it is “Reasonable 50% growth from a base of $ 200,000 or 2.5% growth or 250% return on investment.”

Corn To make that real estate investing dream come true, he stressed the importance of having a plan that takes us to the next step.

4. Create a strategy

Mr Gupta suggested laying your cards down and thinking about your budget for the properties you plan to invest in, how you will allocate your equity among those investments, and identify the return you are looking for.

Additionally, he asked you to determine your risk appetite: do you want to be an active investor by participating in the property subdivision or renovation, or do you just want to be a passive investor?

The next step in Mr. Gupta’s strategy is to select the suburbs. In Australia’s 15,000 suburbs, where do you want to buy a property?

He stressed the importance of looking at data showing suburbs with positive cash flow and capital growth.

In the suburbs you chose, he suggested choosing the best pockets for investment because in reality there will always be “good and bad streets and properties”.

Once you’ve selected the properties, it’s time to negotiate and understand the tax and legal side of things. There are ways, he said, for you to save on taxes, and it can also be done by knowing the best legal entity to take when buying properties.

For this part, Mr. Gupta joked that you don’t have to be afraid if you don’t have any knowledge of these things. You can build your dream team consisting of a mortgage broker, transport agent, lawyer (if needed), and property manager to help you build your real estate portfolio.

He concluded with a reminder to keep it simple because, in five years, you will have “built hundreds of thousands of dollars in passive income by capitalizing on the 2020-2021 real estate boom”.

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Real estate is a type of real estate that refers to any land and its permanent improvement or accompanying structures, whether natural or man-made.

How can new investors take advantage of equity?



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Last updated: December 24, 2021

Posted: 04 January 2022