How to Use Home Equity to Buy Rentals | Bigger Pockets Video

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This is how to use home equity to buy rental properties. You have two main options: a HELOC (home equity line of credit) and a cash-out refinance. Both can move hundreds of thousands of dollars out of your property’s equity and into your pocket (tax-free). You can then use those funds to invest in real estate faster instead of waiting years to save up your next 20% or 25% down payment. Which option should you use in 2025?

While a HELOC has much more flexibility, a cash-out refinance can work especially well for those with a higher interest rate on their mortgage than what’s being offered today. A HELOC lets you take the money at any time and choose how much of it you’d like to use, but with variable interest rates, a HELOC could put you in a tight spot IF rates go higher.

Remember: both can be used to buy rental properties using home equity, but only one may be the right decision for you. Dave breaks down the pros and cons of both, plus shares his take on using home equity to invest in real estate