For 30 years I have watched many people be penny wise and dollar foolish with Real Estate Equities. Equity is the difference between the value of a property less the loans. With the high appreciation in many Real Estate markets over the past few years, there is an incredible amount of new found equity in occupied residences and rental homes. Idle equity in any Real Estate is a great security but a terrible investment. Today millions sacrifice a better retirement for the security of today’s equity in their homes and investment properties. As property prices rise, increasing equity, many do not use it to its maximum. It is easy not to realize that with the mortgage being paid down each month and the values rising, there is money in idle equity to grow your investment portfolio without using a dime of your own cash. Taking this cash out to grow your investment portfolio is 100% leverage. Not using any of your own money. Doesn’t get any better than that.
I have had tax consultants tell me that if it were not for the rental home(s) the medium income taxpayers owned, their retirement would have been much less comfortable. Putting idle equity to proper use with smart leverage can make a world of difference in your retirement. And to even better the theory, in three to five years, depending on appreciation, you can do this all over again and add more without additional funds and the growth multiplies.
