Approximately 1 in 6 people with mortgages will refinance this year. Traditionally, people have refinanced in order to use the equity in their home or investment property to consolidate or reduce debt and take advantage of a lower interest rate. While this is still used as a common strategy for reducing debt, a growing number of people are discovering that it can also be used as an effective strategy for generating wealth. While purchasing a property by using the equity in your home or investment property may be viewed by some as a fairly aggressive approach to investing, it is actually much easier than you think. Through wise planning with guidance from the right professional, this type of investment can be easy to execute as well as extremely lucrative.
In the CONNECT Investment Blueprint Part 1, we discussed the fact that people who have made a fortune in real estate have done so by using the power of leverage and refinancing. One of the secrets of the wealthy is that they constantly look for ways to increase good debt and eliminate bad debt. Good debt is used to make an investment that appreciates in value. A mortgage is an example of good debt because it helps a person purchase a property that will rise in value over the long term. In this article we would like to show you how you too can build serious wealth in real estate through refinancing.
Here’s how the CONNECT Investment Blueprint works:
Purchase property #1. Remember that in Part 1 of this article, I made reference to the fact that when buying pre-construction, you only need 10-20% down and that this is spread out over a period of 365 to 540 days.
Refinance property #1 in years 4 to 6 and purchase properties #2 and #3. Refinancing allows you to take equity out of property #1 tax free, since you don’t have to pay taxes on this money until the property is sold.
Refinance properties #1, #2 and #3 in year 10, 11 or 12 and buy properties #4, #5 and #6. Have all 6 mortgages paid off within 20-30 years from investing in property #1.
There is an optimal time to refinance so that you can maximize available funds and still be cash-flow positive. We help our clients determine the best time to refinance.
Schedule an appointment with us today, so that we can help get you started on the path to RETIRING RICH.