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Allow's say you have a hundred thousand bucks in a financial institution, and afterwards you find it an investment, a syndication or something that you're wanting to place a hundred thousand right into. Now it's gone from the bank and it remains in the syndication. It's either in the financial institution or the syndication, one of the 2, but it's not in both.
And I try to help individuals recognize, you recognize, how to increase that efficiency of their, their cash so that they can do more with it. And I'm truly going to attempt to make this simple of using a property to purchase one more asset.
And then you would take an equity placement against that and utilize it to acquire one more building. You understand, that that's not an an international principle at all, correct?
And afterwards making use of that property to purchase even more realty is that then you end up being extremely exposed to property, suggesting that it's all associated. Every one of those properties become correlated. In a downturn, in the totality of the real estate market, after that when those, you know, things begin to lose worth, which does take place.
Uh, you know, and so you don't desire to have all of your properties correlated. What this does is it provides you a location to put money at first that is completely uncorrelated to the actual estate market that is going to be there assured and be ensured to enhance in value over time that you can still have a really high collateralization variable or like a hundred percent collateralization of the cash money value inside of these policies.
I'm trying to make that as easy as possible. Does that make feeling to you Marco? Yes, specifically. Precisely. That is, that is precisely the essential thing is that you're expanding an asset that is ensured to grow, however you have the ability to borrow against it, to take into an additional property.
So if they had a house worth a million dollars, that they had $500,000 repaid on, they could possibly get a $300,000 home equity line of credit history because they commonly would get an 80 20 financing to value on that particular. And they might obtain a $300,000 home equity line of credit rating.
Okay. There's a whole lot of troubles with doing that though, that this resolves with my method resolves. So for one point, that credit history line is repaired. To put it simply, it's mosting likely to remain at $300,000, regardless of just how long it goes, it's going to stay at 300,000, unless you go obtain a brand-new evaluation and you obtain requalified economically, and you boost your line of credit, which is a large pain to do every single time you place in cash, which is usually yearly, you add new funding to among these particularly developed bulletproof riches plans that I produce for people, your interior credit line or your access to funding goes up each year.
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