How One Rentvesting Couple Used Equity to Grow Their Investment Portfolio
This couple owned one property outright and wanted to build an investment portfolio. They didn’t need to save another deposit. The deposit was already sitting in the equity of the property they owned.
They came to us through one of our referral partners. He is a solicitor, she works part-time as a registered nurse, and they rentvest on Sydney’s North Shore. Their goal was clear: grow a property portfolio strategically, without stretching themselves too thin.
The problem
On paper, they were in a strong position. They had one unencumbered property, solid professional incomes and a long-term plan.
But equity sitting in a property doesn’t buy the next one on its own. It needs the right structure to unlock it. And once a portfolio starts growing, the structure that worked for the first purchase rarely suits the third.
The question wasn’t whether they could invest. It was how to set up their lending so each purchase made the next one possible.
The solution
Step 1: Releasing equity from the debt-free property
We lodged the title of their unencumbered property with the lender as security and released equity from it. That equity covered the deposits and costs for their next two investment properties, without them having to save from scratch.
Step 2: Reviewing the loans less than six months later
We didn’t settle the loans and walk away. Less than six months later, we reviewed the portfolio and found that one of the newly purchased properties had grown in value enough to create new usable equity.
That opened two opportunities:
- Releasing the original property. We restructured their lending so the original property was no longer tied up as security. That gave the couple more flexibility and less cross-reliance between their properties.
- Building the next deposit. Using the property’s higher value, we geared that loan up to 90% LVR. By using a lender policy that offered a lenders mortgage insurance (LMI) waiver, they avoided paying LMI on the higher borrowing. The equity released became the deposit for their next investment purchase.
The result
To date, this family has:
- 2 investment properties successfully settled
- 1 property under contract and progressing through finance
- A potential future purchase being explored through an SMSF structure
The relationship has grown too. The husband has since referred three of his colleagues to us for finance.
What it means for your clients
Equity is often a client’s biggest untapped asset. Many property owners have the deposit for their next purchase sitting in their current home or investment. Releasing it well depends on how the security and loans are structured from day one.
Loan structures need regular reviews. Lenders don’t call your client to say their property has grown in value. A proactive lending review is what turned six months of capital growth into a deposit for this couple’s next purchase.
Lender policy can change the numbers. LMI waivers, LVR limits and security rules vary between lenders. Knowing where those policies sit can save a client thousands and bring their next step forward.
More leverage means more risk. Borrowing at a higher LVR increases debt and repayments, and property values can fall as well as rise. Equity strategies suit some clients and not others. Their income, buffers and long-term goals all need to be part of the conversation.
If one of your clients owns property and wants to grow a portfolio, or has loans that haven’t been reviewed in a while, we’d be glad to take a look. Send them our way, and we can talk through what might be possible. You stay across the advice, and we look after your client.
Frequently asked questions
Can I use the equity in my home to buy an investment property? Yes. If your property has grown in value or you’ve paid down the loan, a lender may let you borrow against that equity. It can then fund the deposit and costs of an investment purchase, subject to your borrowing capacity.
How much equity can I access? Lenders usually let you borrow up to 80% of a property’s value without LMI, minus what you still owe. Some lenders go higher, and some offer LMI waivers to eligible borrowers.
What is an LMI waiver? Lenders mortgage insurance usually applies when you borrow more than 80% of a property’s value. Some lenders waive it for certain professions or borrower types, which can save thousands of dollars.
How often should I review my investment loans? At least once a year, or whenever a property’s value moves noticeably. A review can uncover new equity, a better structure or a sharper rate.
Can I buy property through an SMSF? Yes, a self-managed super fund can borrow to buy property under a limited recourse borrowing arrangement. The rules are strict, so it needs input from your accountant or financial adviser as well as a broker.
This content is general information only and does not take into account your client’s personal objectives, financial situation or needs. It is not personal financial advice. Borrowing against equity and higher LVR lending increase debt levels and risk, and property values can fall. LMI waivers and lending criteria vary between lenders and change over time. SMSF property purchases have strict rules and should be discussed with a licensed financial adviser and accountant. Please speak to a mortgage broker before making any decisions.