What We Mean by Your Equity

Owners sometimes ask us what we mean by "your equity," and what "equity marketing" is. Both are fair questions, and they deserve a simple answer.

Equity is what you own, less what you owe

Say you own a property worth $1,200,000 with a $200,000 loan on it. Your equity is $1,000,000 (the value, less the debt). If there's no loan, it's the full $1,200,000. Most owners carry a number like this in their head for their main property, and in my experience they stop there, when there's usually quite a bit more.

Equity lives in more places than one building

When we sit down with an owner, we add up everything they own that has value, whatever form it's in:

• Property you own free and clear, or with a small loan against it.
• Notes and mortgages you carried back when you sold something.
• Land that's been sitting quietly on your books for years.
• Vacant space in a building you already own.
• Cash that's earning less than it should.

That total is your equity as we use the words, and it's usually larger than the owner expected. Some of it is working hard, and some of it is earning little or nothing.

What "equity marketing" means

In an exchange room, marketing your equity means putting what you already own on the table as your side of the transaction, instead of turning it into cash first. The property, the note, the land, the vacant space, or the cash goes to work for the benefit you want, through an exchange, seller paper, a partnership, or whatever structure fits the people involved. Selling for cash is still one of the choices. It just stops being the only one.

Start with the benefit you want

Every owner needs something different from their equity, and it changes as life changes. The benefits owners ask us about most, in the order we weigh them, are capital preservation, management relief, tax positioning, upside, cash flow, and flexibility. One owner wants to stop being the person everyone calls when something breaks. Another wants to keep the family land and still put its value to work. The structure follows the benefit, not the other way around.

If any of this sounds familiar, you have more choices than holding on or selling and paying the tax, and teaching those choices is why we built this site.

Where to go from here

A good next read is What Is Your Equity Earning Today?, a short piece of arithmetic most owners have never run on their own equity, and then Use My Equity for the forms a transaction can take. If you'd rather talk it through, the first conversation with us is complimentary, and you don't need to show up with a transaction already picked out.