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How to buy investment properties using equity from your own home.

 

Did you know you can use your own equity to buy rental properties?

You may not even need to put any of your own cash into the deal!

Here's the scoop on how it works...

Equity is the value between your property's market value and the amount you owe on its mortgage. Lets say your property is worth $400,000 and your mortgage is $250,000. You have $150,000 equity that you could leverage to buy a rental property. BUT, you cant use all of the $150,000 because the banks will only lend up to 90% of the combined value of the properties you own. So you could potentialy buy an investment property (or more than one) to the value of $1,100,000. This means your home is worth $400,000 and your investment property/s are worth $1,100,000.

In this scenario your total property portfolio is worth $1,500,000. Remember you have $150,000 equity which remains the same, so your total lending from the bank is $1,350,000. So $1,350,000 is 90% of your total portfolio of $1,500,000. This is how you leverage the banks money to build a property portfolio. Over time your equity will increase and you could sell some property and pay off remaining debt. This will give you a passive rental income stream to retire on.

Jeff Kerwin is a property investor himself, so he can provide useful strategies to help you build your wealth and retirement.

Your trusted mortgage advisor,

Jeff Kerwin

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