Property Investing in The 21st Century

Put Your Money To Good Use

In today’s post we will be looking at releasing equity in your residential or investment property, so that you can purchase even more real estate and add to your property portfolio.

The majority of home owners are sitting on bucket loads of equity that they are just letting sit there and not putting to good use to create wealth for them. This is due to a couple of main reasons, being ignorance and fear. The majority of people do not know that you can do this, or if they do, do not know how to do it. The other reason fear, is that they think they will risk losing their family home so will not release any equity to get a line of credit.

Generally on most properties, you can get a LOC (line of credit) on up to 80% of any equity that you already have in the property. Say for example your residence is valued at $400,000 and you still owe $100,000 on it, you could receive a LOC of 80% of the $300,000 equity you have, or $240,000.

$240,000 you can now put to good use. You could put some of this and invest in the Stock Market and Rent Shares to receive a great monthly income, or you could go and purchase another or several Investment Properties. Actually, you could quite comfortably to both and that is the real key for creating lifestyle and future real wealth.

To create your LOC, you must first approach a lending institution or Mortgage Broker, and preferably not the same one as which the original mortgage is held with, if you still owe money on it. If you were to approach the original lender, they can make the process quite difficult for you.

Be warned, the paperwork for an equity LOC can take some weeks to be prepared and the facility ready for you to use, so it is a good idea to arrange the line of credit before you begin looking for an investment property. Just because you have a line of credit at your disposal, does not mean that you have to use it. It is there only if you want to use it.

In the next post, we will look at how much of your equity line of credit you should use when purchasing further real estate investments so as not to over extend your financial position.

Are You Ready For Real Estate?

It’s a question that you have to ask yourself right now, as the time has come to start adding to your investment property portfolio. The local (Australian) Real Estate Market has copped a hiding lately, and that is great news if you are a smart investor.

Look at it this way, many suburbs have experienced growth of between 15-25% for many years now, and all we are seeing is prices falling back in line with long moving averages to where they should be right now. It’s not so much as properties are going down in value, yet rather their growth is flat while the moving average catches up.

Interest rates are coming down, and coming down quickly. Rents are continuing to go up still. What this means is that there are a lot of great quality properties coming on the market right now where if you do your homework, you could have a neutrally geared property. Your rents received could cover your interest only mortgage repayments, or at least come very close.

Saying this, you still have to find the right properties, and in the right areas. Not all investment property is created equal, and having  financial knowledge and foresight is very important. Much of the  Real Estate on the market right now, is not a suitable investment, especially those in the mortgage belts and in rural areas.

This is a great time to become financially educated and learn as much about Property Investing as you can. The 21st Century Academy Homestudy was the one that taught me what to do, and what not to do. The buying opportunities right now offer massive potential to build real wealth in the future.

How Do You Go About Purchasing A Foreclosed Property?

In today’s post we will have a look at a strategy that many people are interested in as it allows them to purchase an investment property at a price that may be well under the properties true value.

A foreclosed property is usually one where the owner has been unable to keep up with the repayments for whatever reason, and after a certain point the lending institution takes legal action and takes possession of the real estate in question. The bank or lender can then put the property on the market to recover any costs still outstanding from the original mortgage.

It is important to remember that if you do want to buy Real Estate that has been foreclosed, then it is advisable to let you property team know your intentions. Your solicitor will be able to run their eye over the finer details, and ensure the property is free from any other creditors or encumbrances.

Finding foreclosed properties that are for sale can be a difficult undertaking in Australia, as they are not blatantly advertised as they are in the US for example. This is where it really helps to have some excellent contacts in the Property Investment world.  Having contacts at a Real Estate Agency is a massive bonus here, as they can get access to properties that are being sold. Having contacts in Banking circles is another way to get some quality information to help you on your way.

When a property does come on the market due to foreclosure, the Bank or lending institution is usually only interested in getting anything owed, plus some administration costs. Usually, they are very strict on the minimum price and will not budge below their reserve. If the property is worth it though, there is no point trying to get it at a further discount as you would have already got instant equity in the property if the deal was already undervalued.

Purchasing foreclosed property is somewhat of a specialized subject, and today I have only touched on it a little. There are plenty of excellent resources available on the subject if it is something that you are interested in, including on the free DVD from The 21st Century Academy.