This free simulator models equity recycling for property: start with 1 deposit, and each time the portfolio builds usable equity (80% of value minus debt), the next purchase funds itself. Compare the 15 to 30 year curve against leaving the same deposit in shares.
Start with one deposit. Each time your portfolio builds enough usable equity, the next purchase funds itself. Watch the curve pull away from leaving the same money in shares.
Equity recycling is the strategy of using the equity that builds up in one investment property as the deposit for the next - and then the next, and the next. Instead of saving a fresh cash deposit every three years, you let the portfolio's own growth do the funding. The first property is the one you save for; every subsequent property, in principle, funds itself out of accumulated equity.
Two things make it work: growth (the property has to actually appreciate) and lending policy (a bank has to be willing to release the equity and lend against the next purchase). Both are real constraints. The simulator above assumes both cooperate, so treat the curve as a best-case shape, not a promise.
Practically, the sequence looks like this: (1) revalue an existing property with your lender, either informally or with a full valuation; (2) apply for an equity release loan taken to 80% LVR (loan-to-value ratio) of the new value, minus the existing debt; (3) park the released funds in a dedicated offset or split-loan account, so the interest is cleanly traceable to investment use; (4) use those funds as the deposit plus buying costs (typically 20-25% of the new property's price) on the next purchase; (5) take out the main investment loan for the remaining 75-80% at settlement.
A mortgage broker who knows investment structures is worth their weight here - the paperwork isn't hard, but keeping the loan structure clean (never mixing personal and investment borrowings) is what keeps the interest fully deductible. Get this wrong once and your accountant will spend years untangling it.
$150,000 starting deposit, buying $600,000 properties, 6% growth. Property one takes the whole deposit at settlement. By year 3-4, growth on that first property has generated enough usable equity to fund property two. By year 6-7, the two-property portfolio has grown enough to fund property three - and now you have three properties compounding. By year 15, the simulator typically shows a 4-5 property portfolio with total value in the $3-4m range and net equity often above $1.5m, depending on debt paydown assumptions.
The same $150,000 in shares at 7% over 15 years grows to around $414,000. The gap isn't shares being bad - it's leverage doing its job on a growing asset base. It's also why the leverage cuts the other way in a downturn, which is the honest limit below.
The simulator assumes that each time you have the equity, a lender will hand you the next loan. In reality, lender serviceability tightens as your portfolio grows - existing debt, assessed at your rate plus a buffer, chews into your borrowing capacity even though the properties are cashflow-positive or close to it. Most portfolios stall at property 3 or 4 not for lack of equity, but for lack of serviceability.
Fixing that is a broker conversation, not a spreadsheet conversation - it involves lender selection, income structure, sometimes moving from one lender to another to reset the assessment. Treat this simulator as the equity story only, and pair it with a broker's borrowing capacity assessment before you commit to a plan.