Releasing Property Equity with Alternate Capital – Podcast
Real Estate additional borrowing with Alternate Capital: This episode shows how property investors activates hidden reserves and releases liquidity without selling their property.
Releasing capital through additional property borrowing
Original recording in German.
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What this episode covers
Between the present value of a property and the remaining debt lies capital that does not work. The result explains how additional borrowing transforms this free borrowing capacity into available liquidity – for purchases, refurbishments or equity in the next project.
We present the three ways – increase at the existing bank, subordinated loan in second place and complete refinancing – and explain which way is the fastest and cheapest.
Key points
- How free lending reserve is created: increase in value and repayment.
- The three ways of comparing additional borrowing.
- Why second place ranking is often the fastest.
- What professionals use the released liquidity for.
- Prerequisites: free reserve and sustainable debt service.
Release capital without selling
The result emphasizes the tax and strategic advantage: the property remains in ownership, hidden reserves remain untaxed, and liquidity strengthens the next investment. The prerequisite is that the rental income sustainably bears the increased debt service.
The sample calculation and the variants can be found on the guide page "Refinance real estate" and the service page for the additional borrowing.
Quick answers
How much capital can be freed up?
The difference between accepted loan-to-value ratio (usually 60–75 % of the current value) and the residual debt – often substantial amounts for value-added, repaid properties.
Does the existing bank need to agree?
It decides on the increase itself; in the case of subordination to the second rank, its approval is not required in principle.
How fast is liquidity available?
Subordination in the second rank is often displayable in three to six weeks; top-up and refinancing follow the usual banking processes.
Jürgen Kronawitter
Jürgen Kronawitter specialises in structured real estate finance. He helps property investors, developers and portfolio owners implement complex financing solutions. His work focuses on structuring and arranging senior loans, whole loans, mezzanine capital and bridge loans, as well as tailored financing for acquisitions, investment properties, developments and refinancing. By combining conventional bank lending with alternative capital sources, he develops financing structures for domestic and international property projects.
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