The Property Academy Podcast How to sell 1 investment property to buy 2 ⎥ Ep. 1959
Jan 21, 2025
Discover the 'Sell 1 to buy 2' strategy, where slimming down a property portfolio can lead to impressive growth. Learn how certain assets limit equity and affect borrowing capacities. A numerical example illustrates how selling a $600k land can free up $270k for new investments. Find out which investors can benefit most, and explore common pitfalls, like timing risks and execution delays. Understand the balance between leverage and potential returns while maximizing your investment opportunities.
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Usable Equity Differs By Property Type
- Banks lend differently against property types, so total equity doesn't equal usable equity.
- Selling assets that banks under-lend against can unlock usable capital for growth.
Bare Land Sale Example
- Stephen gives an example selling $600k bare land with $300k mortgage to free usable equity.
- After 5% sale costs they walk away with $270k to redeploy into higher-lendable assets.
Redeploy Sale Proceeds As Deposits
- Use the freed capital as deposits: 20% for new builds, 30% for existing properties.
- That $270k could buy up to $1.35m in new builds or $900k in existing properties.