Property Investing Made Pure
Let me preface this blog by saying that this strategy is NOT for everyone.
Using someone's equity as a deposit or to securitise an investment property will incur risk from all parties if the investment turns sour. Always seek the advice of a qualified financial adviser/mortgage broker.
But that said, I have worked with numerous clients who have adopted this strategy which has enabled them to leap into the investment market years before they would have been able to save the equivalent amount of money. In turn, this has made them big money though property investment in today's market.
Case study:
A client had a $20,000 deposit in 2012 and wanted to buy their first investment property. Even though this was enough for a 5% deposit at the time, the bank was not keen to lend to this person given they had no other assets and were on a graduate income. So the strategy was to engage their parents to guarantee the new investment using their home as security. (Again, there is a level of risk and each person's circumstances need to be assessed individually).
So the parents of this client agreed to guarantee the investment using their family home and the client made their first investment in Western Sydney for $193 000 which was positively geared.
12 months later, the same client wanted to invest again, having saved another $20 000.
At this stage, the first investment property had increased by 6% and the bank was willing to release the parent's house as security. The first property was now held unencumbered by the client.
The client pursued the second investment property and has since purchased EIGHT MORE. Their total portfolio is now worth more than $3m with a net equity of $1.2m and is held neutrally geared. This all started from a $20,000 deposit 4 years ago.
The moral of the story is that without the initial 'tapping of equity' 4 years ago, this client would still be working hard to save enough money to purchase their first home.
As the saying goes…
‘A ship in the harbour is safe, but that‘s not what ships are made for.’
Contact us to help start your investment portfolio.
enquiry@purepropertyinvestment.com
1300 98 54 28
Disclaimer - Contents of this site are of general nature only and should not be relied upon solely when making an investment decision. Pure Property Investment nor any of its directors, associates, staff, or associated companies bear any liability from any actions derived from the contents of this website. One should always seek third party investment information from relevant parties such as legal, finance, and accountancy enquiries.