From Newbie to Mogul: Transform Your Equity

From Newbie to Mogul: Transform Your Home Equity

Before: Owner-Occupier Scenario

• Home Equity: $375,000 (fully owned home)
• Annual Expenses:
• Property Taxes: $4,125
• Home Insurance: $1,200
• Maintenance: $3,750
• Utilities: $3,000
• Other Costs: $1,500
• Total Annual Expenses: $13,575
• Cashflow: -$13,575
• Yield: -3.6%

Strategy: Sell Home, Rent Smaller and Buy 18-Unit Building

1. Sell Home: Cash your $375,000 home equity.
2. Rent a Flat:
3. Annual Rent Expense: $14,400
4. Buy an 18-Unit Apartment Building:
5. Building Price: $1,875,000
6. Down Payment (20%): $375,000
7. Mortgage (80% at 4% interest): $1,500,000
8. Cap Rate: 9.42%

After: Real Estate Mogul Scenario

• Rental Income from 18-Unit Building:
• Annual Income: $176,475 (9.42% of $1,875,000)
• Annual Mortgage Payment (4% on $1,500,000): $72,000
• Other Expenses: $29,200
• Net Cashflow from Building: $75,275
• Overall Financials:
• Annual Rental Expense for Flat: -$14,400
• Net Cashflow from Building: +$75,275
• Total Net Cashflow: $60,875
• Yield: 16.2% (Total Net Cashflow / Initial Equity)

Summary Before:

• Home Equity: $375,000
• Cashflow: -$13,575
• Yield: -3.6%

After:

• Net Cashflow: $60,875
• Yield: 16.2%

By selling your home and investing in an income-generating property, you can significantly increase your net cashflow and achieve a much higher yield on your equity, transforming your financial landscape from negative cashflow to a substantial positive income. Download PropertyCard to calculate your real estate finances and make the most optimal decisions before you buy, sell, remortgage, release equity.