Ever watched in wonder as you see property investors expand their portfolio seemingly without lifting a finger? There is one particular key to making this a viable strategy, and by owning ACT strata you already have it! Here’s how to use your status as an owner to get your foot in the door as an investor.
It’s called leverage
As you pay off your home loan, you build equity in your property. This is essentially the value of your real estate, minus the outstanding balance of your mortgage. For example, say you purchased an apartment worth $400,000 with an $80,000 (20 per cent) deposit.
Over time, it will increase in value and you will pay off your home loan. Let’s say it increased in value by 10 per cent ($40,000) and you have paid off $40,000 of your loan over several years. The equity in your real estate then works out to be $160,000!
You can then use this $160,000 as leverage for securing another property. It might be another piece of strata, a commercial investment, or something else entirely. The point is, simply by owning strata, you may have inadvertently taken a key step on the path to an investment portfolio.
It can be a confusing process, and there are a lot of other variables to take into account. However, with the Reserve Bank of Australia cutting the cash rate and banks almost immediately following suit, it’s almost certainly worth a look in.
Want to find out more about your strata’s performance, equity, or just the real estate market in general? Make sure to get in touch with your Civium Strata representative – we’ll be able to help you out with any burning questions.