Strategies to generate equity faster

Even when property markets are uncertain and price growth is hard to come by, there are still ways you can get ahead with property investment.

Creating equity isn’t always about spending time in the market. You can also manufacture equity if you buy well and implement some proven strategies. While some of the ways to manufacture equity might take some work, they often come with a higher reward. Here are four strategies to generate equity from your property:

Buying the worst house on the best street

There’s no doubt that location is still king when it comes to property. One powerful strategy to faster equity is to identify a run-down property in a highly desirable area. By purchasing a diamond in the rough and renovating it to match the standards of the rest of the street, investors can potentially capitalise on the difference in property values within the same neighbourhood.

While this approach demands thorough due diligence, planning, and an understanding of the local planning requirements, the prospect of a sharp increase in equity can justify the investment of time and energy. You will need to be confident in your numbers though.

Finding properties that must sell fast

Opportunities to acquire properties at below-market value usually emerge from vendors who want to sell quickly. Often times people will need to sell for personal reasons and if they are highly motivated, then they might be prepared to accept a lower price in return for a quick settlement.

Like any deal, you should be looking for a win-win situation. You need to be offering the vendor favourable terms if you want a lower price. However, if you can find the right opportunity, you can instantly create equity by purchasing well.

Modernising an apartment

Cosmetic changes can significantly enhance the appeal and value of an apartment, offering a cost-effective way of generating equity faster. By strategically updating fixtures, refreshing interiors, and aligning the property with current design trends, investors can often increase the perceived value of the home and also get higher rental returns.

Unlike extensive renovations, which require substantial time and capital investment, modernisation focuses on targeted improvements aimed at maximising returns with minimal expenditure. Whether it's refreshing paint, upgrading fixtures, or enhancing amenities, small changes can lead to substantial equity gains.

Property development and subdivision

One of the most common ways to manufacture equity is by either subdividing a block of land or making better use of the land by adding additional dwellings or even demolishing the current property and building multiple new dwellings.

Development and subdivisions can increase the value of your property rapidly, however, they are not always going to be instant. Subdivisions take time as they work their way through councils while building takes time no matter what you are looking to construct. However, compared to a buy-and-hold approach, the equity can often be realised a lot faster.

The numbers also matter. You need to make sure you buy well so you have enough margin that you can make a profit on the sale of the land or the new dwellings.