Mike follows up his first episode on the property investing journey with this podcast exploring the equity question, speaking with industry guru Chris Bates from Wealthful. Chris started Wealthful in 2014 to change the way young families make property decisions and better prepare themselves financially.
In this era of low interest rates and ever increasing property prices, it’s natural for home owners to want to capitalize on the equity built up in their homes to advance their property portfolio. With headlines of 20-somethings accumulating multiple properties and retiring by 30, is it really as simple as turning your equity into your next investment?
In this podcast Mike and Chris talk through the pros and cons of buying investment property with equity and how, with the right strategy in place, homeowners can dramatically reduce risk and ensure there’s a buffer for life’s inevitable surprises.
Covering topics from Lender’s Mortgage Insurance, to quality and location of assets, this not to be missed podcast is crucial listening for anyone contemplating their property investment strategy.
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Mike follows up his first episode on the property investing journey with this podcast exploring the equity question, speaking with industry guru Chris Bates from Wealthful. In this podcast Mike and Chris talk through the pros and cons of buying investment property with equity and how, with the right strategy in place, homeowners can dramatically reduce risk and ensure there’s a buffer for life’s inevitable surprises.
What we cover in this episode
- The importance of a good valuation
- Keeping a buffer to reduce risk
- The value of quality over quantity
- Income multipliers from a bank’s perspective
- Re-using Lender’s Mortgage Insurance (LMI)
- Getting clear on cash flow
- Chris’s top three tips for utilising equity
“You need to be clear on what your longer term life plan is and where you’re going to live” Chris 1:58
“People are a bit over-optimistic of what they can borrow and they just assume that their income is going to allow, and the bank will approve them, to keep both their properties … if you want to keep your investment property plus buy a home, that means you need to borrow a lot of debt.” Chris 3:16
“Those days of being able to constantly buy investment properties were when you could leverage your income much further and the bank’s borrowing capacity was much more aggressive” Chris 5:05
“If you want to keep building a property portfolio, you do need a strong income, plus equity. You can’t just rely on equity.” Chris 7:33
“If using equity to purchase is champagne, then saving for a deposit is cough medicine I’m sure” Mike 9:32
“Quality assets are always easier to sell, but they’re also easier to rent…buying a quality asset will give you a good tenant and managing your cashflow with risk management tactics around LMI and fixing“ Chris 18:48
“If you are in that position with strong equity, you’re keen to stay in your home, you’ve got good income and you can afford to buy an investment property, there are ways to manage your risk dramatically and get a quality asset’s the biggest one” Chris 19:15
Episode 48 – Interview with Christopher Bates
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