Unlocking Home Equity: A Smart Strategy for Real Estate Investment

Using Home Equity to Invest in Real Estate: A Growing Trend Americans are increasingly looking for ways to leverage their existing home equity to fund new investments. One popular method is using a cash-out refinance or home equity loan to secure the necessary down payment for investment properties. This strategy allows homeowners to access the wealth tied up in their homes without selling. "To buy an investment property, you need 20% down. If you don’t have cash, but you have equity in your house, you can get a home equity loan," explains Liz Reese, a financial advisor featured in a recent video. Reese highlights a client who used this approach to buy an investment property. However, it's crucial to understand the implications. Taking out a loan increases monthly expenses. "When you’re calculating payment and cash flow on the new house, don’t forget to add that back in," Reese cautions. Careful financial planning is essential to ensure the investment remains profitable. Experts warn that this strategy isn't risk-free. Interest rates and loan terms can vary significantly. Borrowers should carefully evaluate their financial situation and seek professional advice before proceeding. Despite the risks, the ability to tap into home equity offers a powerful tool for those seeking to expand their real estate portfolios.