B Invested

Your house may not be an income generating asset

When property markets are on the rise, you often hear homeowners referring to their owner-occupier house as an asset.

True assets bring cash into your pocket, while liabilities take it out.

Your house might be worth a lot of money and will keep rising in value the longer you live there, but if it’s costing you money rather than earning it, it is a liability.

Even if you’ve paid off the debt you owe on it, there are still ongoing costs, maintenance, insurance, council rates or strata levies (if not a freestanding house). If you decide to rent it out for an income, but it remains unrented or gets trashed by the tenants, it is costing you money rather than bringing it in.

Making it an asset

So what’s the best way to make sure your house is an asset? The most obvious option is to use the equity you have accumulated in it as leverage into income producing assets, such as investment properties. To do so, you can get your home valued to find out how much equity you have … i.e. the amount that it is worth minus the remaining debt on it.

Say your home is worth $1 million and you owe $300,000 on it, your equity would be $700,000.

You won’t be able to use all the equity to invest, but a lender can calculate your ‘usable equity’, usually the equity you have against 80% of your home’s value.

Usable equity on a $1 million home might be calculated against $800,000, so would end up being $500,000. Lenders do this to safeguard themselves in case your home drops in value by 20%. In other words, if you defaulted on your mortgage or needed to sell for some other reason, they would make sure they got their money back.

Before you use that equity

It’s important to think about your financial goals before you start buying investment properties willy-nilly. The first thing to do would be to reach out to b Invested. We can conduct a discovery session to help you arrive at the strategy that best suits your risk profile and long term financial needs.

The good news is that once that is figured out, we can also help you source the most suitable properties to get that cashflow coming into your bank account.

B Invested founder Nathan Birch built his property portfolio on simple foundations, by buying properties for below market value, with upside for growth and a strong rental return. These properties are vehicles that get him to where he wants to be long term. We can help source properties for you that tick these boxes.

Get a finance strategy

Getting access to the right properties is a good start, but it won’t count for much unless you get the best financial structure and strategy in place for growing an investment property portfolio.

One off loans organised through mortgage brokers can often end in tears because brokers don’t always focus on your bigger picture. Sure, they found you a loan with decent interest and features, but will it help you access your next one, two or even 10 properties? You might find yourself locked in and unable to withdraw equity because your mortgage broker guaranteed their own commission with a no-refinance period.

The Mortgage Strategist team at Zinger Finance was put together to cater to property investors who need flexibility and easy access to their equity so they can keep acquiring properties. Zinger Finance can help you get a finance strategy in place that won’t hold you back and show you how best to structure your debt.

Maintenance, management and maximising money

As you add properties to your portfolio, it’s essential to have the best property management team in place. A lot of property managers are only worried about collecting rent and organising routine inspections and repairs as needed, but Blink Property’s team views your portfolio holistically.

Blink Property’s Property Asset Managers focus on increasing the capital value and rental return of your entire portfolio, including recommending rent increases, organising bulk repair and maintenance jobs to cut down on callout fees and early intervention/off-season services to equipment, systems and appliances to save money and identify potential problems before they become more expensive ones.