May 15, 2017
Are you sitting on equity and haven’t put a thought into what to do with it? You could sit on that equity but I personally don’t like “dead equity.” Dead equity is money that is not working for you.
We all work to pay down our mortgages, but what happens with that pay down? Often times, It sits there – doing absolutely nothing until you decide to sell.
What if you don’t want to sell?
I prefer to buy and hold properties as well, But I sure don’t leave my equity lying around doing nothing. As soon as I have a solid amount of appreciation, I refinance a property at its new higher value and pull out cash tax-free.
Traditionally, people have looked at the concept of refinancing property as a no-no!
The old school mentality has people believing that they need to see that balance get to zero before they they have been successful. A zero balance on a mortgage is great, but why not leverage that equity to gather more properties?
Everyone wants to naturally see a payment go down to zero – BUT, what if I told you that refinancing your property in order to acquire another one is about the best thing that you could do with that dead equity?
It’s the method that I use in my real estate investing and it’s what has worked for me. I don’t let my equity sit there and not do some work – It’s my hard earned money and you can bet that I want it to perform for me. The years that you sit there and watch that equity grow, are years that it could be used to towards another investment.
Placing a new loan at a higher loan balance would raise your debt service payments and lower your cash flow on the property being refinanced, but you’d more than make up for it if you use the cash to buy another larger property and get more combined cash flow from two properties.
Let’s look at the IDEAL list of attributes for a great property investment.
(Commercial income producing property, such as an apartment building, is the only vehicle that possesses all 5 attributes)
Here’s what an apartment investment offer that a single residence won’t
Would you like to talk about methods for putting your equity to work for you? Do you want to know exactly how all of these 5 ideal investment attributes can be applied in an apartment investment? Book a free strategy call with me!
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