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How to Use Past Capital Growth to Plan Your Investment Future One of the most useful indicators for property investors is past capital growth. Why? Because understanding how much your property has already grown in value can help you plan what to do next — whether that means accessing usable equity or forecasting what’s realistically possible in the future. Step 1: Look Back at What Growth You’ve Had Start by entering your property’s original purchase price and current estimated value into our Capital Growth Calculator. This shows you how much capital growth you’ve achieved over time, and what percentage that growth represents per year. Example: If you bought a property for $600,000 and it’s now worth $750,000, you’ve gained $150,000 — or 25% — in equity growth. That can be a powerful stepping stone. Step 2: Understand Your Usable Equity Just because a property has gone up in value doesn’t mean the bank will let you use all of it. To find out how much equity you could actually borrow against, use our Equity Calculator. This tool takes into account your current loan and lending limits (like 80% or 90% LVR). This helps you identify whether you can refinance, draw equity for another investment, or consolidate your loans to improve cash flow. Step 3: Plan Ahead Using the Rule of 4 Once you know how much usable equity you have, the next question is: what value property can you afford to buy? That’s where our simple Rule of 4 comes in — multiply your usable equity by 4 to get a rough guide to your maximum purchase price. Example: $150,000 usable equity x 4 = $600,000 property value. This rule of thumb helps you stay within safe lending limits while planning your next purchase. To read more, check out our blog: What Property Can You Buy With Your Equity? Start with the Right Numbers Using capital growth and equity correctly can make or break your investment strategy. These free tools from The Successful Investor will give you a clear, realistic picture of where you stand — and what to do next: Capital Growth Calculator Equity Calculator Need help interpreting your numbers? Book a free chat and we’ll help you make a clear investment plan.

Buying an investment property isn’t the first step — getting your finances ready is. Before you go to inspections or talk to agents, you need to know what you can afford, what a bank will lend you, and how the numbers will affect your day-to-day life. Here’s what to check. Are You Ready? A lot of first-time investors ask, “How do I know if I’m ready?” If you’ve got a stable income and either some savings or equity in your home, you might already be good to go. But before you start applying for loans, run through this checklist. Financial Readiness Checklist Tick these off first: Know your income, debts, and current expenses Understand your goals: Are you chasing growth or cash flow? Have a deposit — from savings or equity Know your borrowing power Estimate your after-tax cash flow (loan repayments vs rent) Be clear on the type of property you’re targeting What Can You Afford? Your buying power depends on your income, liabilities, and deposit. General rules: The more deposit you have, the better. If you own a property, you might be able to use equity as your deposit. Your bank or broker will calculate your borrowing capacity, but it pays to understand it yourself first. If your borrowing capacity is low, use a broker; they can check multiple banks for you. How Much Deposit Do You Need? Most investors aim for a 20% deposit—it keeps their lender happy and helps avoid Lender Mortgage Insurance (LMI). Your deposit can come from: Cash savings Equity in your current home or another property Or a mix of both Some lenders may accept a 5% deposit, but you’ll likely pay LMI, which can add thousands in upfront costs. Don’t Forget the Upfront Costs On top of your deposit, budget for another 5% of the property price to cover: Stamp duty (varies by state) Conveyancing and legal fees Loan setup or application fees Building and pest inspections Property insurance Stamp duty is the biggest line item most people forget — check the cost before you fall in love with a property. Can You Buy With Family or Friends? Yes — it’s called co-ownership, and it’s a smart way to get into the market sooner if you’re short on deposit. Benefits: Split the deposit and costs Boost your combined borrowing power Share ongoing expenses Risks: You’re all on the hook for the full loan You’ll need a written agreement for how it works — and what happens if someone wants out If you’re considering this, we recommend getting a lawyer involved early. Want to Talk to a Finance Specialist? We’re not mortgage brokers, but we work with one we trust — and he’s helped many of our clients set themselves up to buy. If you’d like an intro, just ask. There’s no pressure, and no cost. Book a Free Consultation Michael Sloan has helped thousands of Australians invest in property smartly—with a plan, not just a gut feeling. Book a free call and let’s talk through your numbers, your goals, and what’s possible. 👉 Book Your Strategy Call

If you’ve got equity in your home, you may be able to use it as a deposit to buy an investment property, but what value property can you buy? That’s where the Rule of 4 comes in. What is equity? Equity is the difference between your property’s market value and what you owe against it. For example: If your home is worth $800,000 And your loan is $500,000 Then you’ve got $300,000 in equity But you can’t use it all. The bank will hold some back as a buffer to protect its interest in the property. You might have $300,000 of equity, but how do you work out how much you can use? You can do that here by using our free equity calculator. Once you know how much usable equity you have, the next step is to work out what value property you can buy with it. The Rule of 4 — a simple formula that works At an 80% Loan-to-Value Ratio (LVR), the magic number is 4. Multiply your usable equity or cash by 4 to work out the maximum value of the property you can afford — we have allowed 5% for stamp duty and buying costs. If you’ve got $100,000, that means you could buy a property worth up to $400,000. It’s simple. Practical. Repeatable. How does it work? Let’s see. Let’s say you’re buying a property for $400,000: The bank lends you 80% = $320,000 You need to cover the $80,000 deposit Plus, you’ll pay around 5% in buying costs = $20,000 That’s: $80,000 (deposit) + $20,000 (costs) = $100,000 In other words, you need 25% of the total property price to cover the deposit.And 25% × 4 = 100% — that’s why this rule works. What if you’re borrowing at a higher LVR? If your lender is willing to go above 80%, the multiplier increases: LVR Multiply by Property Value (based on $100k) 80% × 4 $400,000 85% × 5 $500,000 90% × 6.66 $666,000 You can stretch your equity further this way — but keep in mind: Your loan will be bigger, so you will pay more interest You may be hit with Lender’s Mortgage Insurance (LMI) You need strong borrowing power to borrow over 80% of a property’s value. Q: Should you use all your available equity? A: Not necessarily. You don’t want to put yourself in a vulnerable position. Things happen — job changes, illness, rising costs. You want a buffer. You could keep some cash in savings, or leave a portion of your equity untouched. That way, you’ve got something to fall back on if life throws you a curveball. Real example: Molly’s approach Molly had $200,000 in equity. At 80% LVR, that gave her: $200,000 × 4 = $800,000 in property buying power. But she chose to leave $50,000 aside for emergencies. So she worked with $150,000 of usable equity instead:$150,000 × 4 = $600,000 property value If she buys off the plan and pays stamp duty only on the land, she may even stretch that further. Spending less on buying costs increases what she can afford. A word of caution The Rule of 4 gives you a useful estimate — but it doesn’t guarantee the bank will lend you that amount. You still need: Enough income Strong borrowing capacity A clean credit record So before you start house hunting, speak to a broker or property investment expert and confirm what’s possible for you. To calculate how much usable equity you have, use our free Equity Calculator.