Leveraging equity through smart financing
No other form of investment offers better leveraging of equity through loan capital to create long-term wealth than property. It is unusual for the average investor to finance stocks, funds or bonds through loan capital, because these assets are far too volatile, making the risk much higher. Property is a far more stable asset, less susceptible to fluctuations.
Capital growth property in better locations, where the typical loan-to-value ratio often higher, up to 80%, offers the opportunity to achieve a much higher return on equity (ROE). Tenants and Tax office paying the bill of financing and managing the asset. 30 % equity to be used at the beginning including the incidental purchase costs.
One benefit of investing in higher capital growth property is the opportunity to leverage your existing equity. With a good loan-to-value (LTV) ratio, the remaining equity can be used to finance a second or third property immediately, or the property can be re-mortgaged, say after five years once its value has increased. This available equity can be used to finance further property purchases, building the foundation of financial freedom.