Hinternoosa Rentals

Your Hidden Nest Egg – Usable Equity

4th of February, 2025

Once you have purchased your first investment property, as its’ value increases over time, you can start to buy property after property, using equity to expand your wealth for long-term financial security.

Usable equity (different from total equity) is the available money in your investment property that you can access to borrow against.

Financiers and banks will typically lend you 80% of your property’s value, less the debt you owe.

For example:

Your investment property is valued at $600,000 with a $200,000 mortgage.

Calculation:

$600,000 property value

$480,000 property value at 80%

$200,000 minus your debt/mortgage

= $280,000 usable equity

With the useable equity, you can invest up to $1,400,000 to purchase additional properties. However, you would keep your property purchase value lower, allowing you to apply a portion of the equity to cover purchase costs, such as legals, building inspections and stamp duty.

Many investors are discovering that property values have increased so much in some areas that they can access enough equity to purchase multiple properties, especially in areas with lower values that can also be cash-flow positive.

Now could be your time to consider growing your property investment portfolio.