Real Estate Trading (exchange, swap, barter or trade) is an age old, well established selling system that has been used for centuries, more recently (until now) Trading has been the domain of wealthy people who exchange one, two or groups of properties (Portfolios) to make 'strategic' gains with fewer steps.
Essentially, Trading is a method of transferring your equity from one property to another, quickly moving to improve your position. You can move your equity into higher value Property (Trading up to improve cash flow and the quality of your portfolio), or you can move your equity into lower value property (Trading down usually getting a cash difference to help you repay the mortgage, reduce borrowings or cash out). It is also possible to Trade a first property then Trade again and again, each time working to increase your Equity as well as the desirability and value of the property you have.
Whether you are a Professional Trader or first time property Trader, the main objectives of Trading Property are simple:
- To preserve or consolidate your equity.
- To move non income producing property into income producing property.
- To free up capital by reducing borrowings.
- To reduce your servicing of Debt.
- To strategically sell and buy to improve the Investments held.
Why Trade?
- You can reduce borrowings by Trading down to get your Equity out of Property.
- You can preserve your Equity in a changing Market.
- You can move your equity into another type of asset or income producing property.
- You can improve assets held more quickly than traditional listing and waiting.
- You avoid exposing the value of an asset to the Market in the Auction process.
- You can maximise the value and potential of your asset.
- You can turn your Equity into something of lower value and Cash.
How to get started?
Trading / Swap / Exchange examples:
Here are some examples of how SWAPPING / TRADING & EXCHANGING equity in property can work:
EXAMPLE 1: NON INCOME PRODUCING INTO INCOME PRODUCING / TRADING DOWN FOR CASH.
Vendor A lists with L&M, they have a small block of land valued at $80,000 but would prefer to purchase an income producing property. L&M find Vendor B on our books, they have a Residential Investment Unit valued at $650,000. We negotiate the proposition that Vendor B accepts the block of land as a trade. Vendor A trades the block of land to Vendor B and borrows $570,000 plus costs. Vendor A achieves their objective of turning a non income producing block of land into an Income producing property. Vendor B ends up with a block of land, cash and the opportunity to develop or sell the land.
EXAMPLE 2: REPOSITIONING INVESTMENTS / REDUCING BORROWINGS.
Vendor C lists a Tenanted Industrial Unit valued at $1,200,000 with L&M, their objective is to reduce the Borrowings, We find Vendor D on our books who has a Residential Unit valued at $809,000 with Equity of $200,000 and wants better long term growth potential. We negotiate the proposition that Vendor C accepts the Residential Unit as a trade. Vendor B increases Borrowings but gains a very good income producing Tenanted Industrial Property with capital growth potential. Vendor C achieves their objective of reducing borrowings.
EXAMPLE 3: BUILDING BLOCKS INTO INCOME PRODUCING / CASHING OUT OF INVESTMENTS.
Vendor E has a house with two blocks of land attached, they wish to retain the house and sell the land into a property with the potential to improve value. Vendor E lists the two blocks of land with L&M at $210,000. L&M find Vendor F who has two units that desperately need to be refurbished valued at $580,000. Vendor E buys the Units raising enough capital to cover the balance to purchase of $370,000, costs and Development. Vendor E achieves their objective of increasing the value of the Units and after refurbishing, we help sell both for cash. Vendor F sells one block of land for cash and trades the other on a Holiday Home up the Coast. They achieve their objective of replacing Tenants with lifestyle.
EXAMPLE 4: FAST SALE OF A BLOCK OF UNITS / INCREASE INCOME TO SERVICE BORROWINGS.
Vendor G lists a block of 8 x two bedroom Units they want to sell quickly, each unit is valued at $550,000. L&M know some can be sold for cash, so we find Vendor H on our books who has a Residential House valued at $1,800,000 with equity of $800,000. Vendor H wants to increase income to service borrowings. L&M negotiate the proposition that Vendor G sells 4 Units at a value of $2,200,000 and takes the House plus $400,000 in cash as the trade. Vendor H ends up with Tenanted 4 Units producing enough income to service the Mortgage. L&M assist Vendor G with the sale of the other four Units and they sell the House at $1,780,000 for cash.
EXAMPLE 5: TURNING NON PERFORMING PROPERTY INTO REAL ESTATE / CASHING OUT OF INVESTMENT.
Vendor I has a luxury Ducati Motorcycle valued at $38,000 and wants a small development. L&M has Vendor J on the books and they have a two bedroom Unit in need of updating valued at $225,000. Although Vendor J just wants to cash out, the proposition of $187,000 plus the Motorcycle has appeal. Vendor I raises enough capital to cover the balance to purchase of $187,000 and their costs. The Development of $23,000 is funded separately and the Unit once finished is valued at $280,000. Vendor I lists the Unit with L&M and we find Vendor K for them ...what have you got to trade?
SWAP / TRADE / EXCHANGE equity in property to lower borrowings / improve cash flow / consolidate gains & improve Real Estate held.
THE ABOVE ARE EXAMPLES ONLY PROVIDED AS AN ILLUSTRATION OF HOW SWAP, TRADE, EXCHANGE CAN WORK.
Want to find out more....
TELL US what you have and what you want to achieve, E-mail: info@property-online.com.au
L&M Property Marketing offers you the opportunity to sell and swap your Equity in a property into another property, we will professionally facilitate the sales in the legal format used by the solicitors in your location.
