3 Strategies to Raise Equity through Real Estate Investing

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By Nick Graff,CCIM

Property investing offers many perks that other investments can't. Naturally, the other possible choices have their perks, but if you are an entrepreneur pleased to dig in and create good things for this world, Property Investing is in a class of its ' own.

Take equity build-up as one example. There are plenty of other advantages to investing in property, but just with taking charge of the way in which you raise equity will be enough to choose Property as an investment. In this writing, we're going to discuss 3 ways you can add to your net worth by targeting building up your property's equity.

1. Principal Reduction - Every time a tenant makes a payment to you and you have at least enough to cover your mortgage payment, you are gaining worth. If your payment is $5,000 per month and your principal is reduced by $1,000 each month, you'll owe $12,000 less in your liabilities column of your net worth. Now, you are $12,000 richer. As the property gets nearer to being paid in full , that $1,000 number will increase as will your net worth.

2. Natural Appreciation - Over the course of history, Real Estate has appreciated slightly under 5% every year. If the value of your property is $500,000, you are adding $25,000 in equity to your property and to your net worth. Naturally markets ebb and flow and you can also lose money. If you pay close attention to emergent markets, you will not have that problem and you can increase that number above 5% due to your knowledge. This is true in down markets also.

3. Forced Appreciation - By learning how to increase the value of your property thru repairs, maintenance, income, costs, management, and economic demand and supply, you can increase the net operating income of your investment property and increase the price. This is the biggest way to see quick gains without too much effort. If you increase the value of your net operating income by $500/month or $6,000/year and your market cap rate is 8%; you have just upped your property's price and your private net worth by $75,000. This is something you can do over a period or pretty soon if your property is in position. So as to do this, you have to have good market info so that you undersand what your property is actually worth. Have a look at this newer article for more tips on finding the genuine value:The 3 Best Resources For Commercial Property Sales Records.

In the previous example, the individual increased their net worth by $112,000. Although this could seem impractical or too good to be true, it's not. You have to learn the right strategies to try this and you should surround yourself with good folk who can point you the right way, but this is achievable. In reality this is one tiny deal. Imagine if you increased the number from 500k to 5M! Instead of 10 units, you purchase 100 units. Then, you can see that $112,000 looks pretty tiny. There are backers doing this as a living. Somebody out there owns that apartment building and strip mall down the street from you and they don't do it for nothing.

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