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Let's claim you have a hundred thousand dollars in a financial institution, and then you discover it a financial investment, a submission or something that you're wanting to put a hundred thousand right into. Currently it's gone from the financial institution and it remains in the syndication. It's either in the bank or the submission, one of the 2, but it's not in both.
And I try to assist people understand, you understand, just how to boost that efficiency of their, their cash so that they can do more with it. And I'm really going to try to make this simple of using an asset to purchase one more possession.
Real estate financiers do this constantly, where you would accumulate equity in a property or a residential property that you own, any kind of, any realty. And afterwards you would take an equity setting versus that and utilize it to acquire one more residential or commercial property. You recognize, that that's not an a foreign idea at all, correct? Entirely.
And afterwards utilizing that property to buy even more realty is that then you come to be highly exposed to genuine estate, implying that it's all correlated. All of those properties end up being associated. So in a decline, in the whole of the property market, after that when those, you recognize, points begin to decline, which does happen.
It hasn't occurred in a while, but I don't understand. I remember 2008 and nine rather well. Uh, you understand, therefore you don't wish to have all of your properties associated. So what this does is it provides you a location to put money initially that is completely uncorrelated to the realty market that is going to exist assured and be ensured to enhance in worth over time that you can still have a really high collateralization variable or like a hundred percent collateralization of the cash money value within these plans.
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I'm attempting to make that as easy as possible. Does that make sense to you Marco?
If they had a house worth a million bucks, that they had $500,000 paid off on, they might probably obtain a $300,000 home equity line of credit history because they generally would obtain an 80 20 funding to worth on that. And they might obtain a $300,000 home equity credit line.
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Okay. There's a lot of issues with doing that however, that this resolves with my approach fixes. So for one point, that credit limit is fixed. Simply put, it's mosting likely to continue to be at $300,000, despite for how long it goes, it's going to remain at 300,000, unless you go obtain a new assessment and you get requalified monetarily, and you raise your line of credit, which is a huge discomfort to do whenever you put in money, which is commonly annually, you add brand-new capital to among these specially made bulletproof wide range plans that I produce for people, your internal credit line or your access to funding goes up annually.
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