How to Best Leverage $500k in Equity for Additional Income

Question

I purchased a two-family property in 2017 and now have around $500K in positive equity. My goal is to leverage that equity for additional income. I’m a full-time sales professional at a global GSI, so I’m seeking relatively efficient strategies.

Has anyone successfully used cash-out refinances, 1031 exchanges, or other equity-based approaches to boost income? I’m also open to exploring short-term rentals, private lending, or passive investing in funds—anything that maximizes returns while keeping risk and time commitments manageable.

For context, I’d consider leaving my job if this could become a full-time venture that surpasses my current compensation (low-mid six figures). My father is a certified contractor in NJ—he’s built one home, flipped four, and consistently handles upgrades and maintenance for me and his other clients.

I’d appreciate any tips or stories from those who’ve turned equity into a profitable venture. If this isn’t the right forum, please let me know and I’ll remove the post. Thank you!

Seth Singer · Answer

Hey Anthony, in that case I would probably invest out of state and find a partner in that state to be the boots on the ground. You have the resources to know what you’re doing and for renovations your dad I’m sure could put a great scope of work together. If you are ever looking to invest in Florida we should connect! Right now I am aiming to do two houses a year but could always throw in a partner to do more with!

Anthony Maffei · Answer

Thank you, Chris, for your thoughtful insights—it’s an excellent point to consider the financial and tax implications of leveraging equity. Here’s how I’m currently thinking about it:

The interest rate on my existing property is 3.5%, so I’d like to maintain that rate rather than refinancing the entire loan. Instead, I’m considering a HELOC at around 6% interest. While the borrowing costs are higher, I’m exploring strategies where the returns could offset this.

For example, I could use the HELOC to purchase a single-family rental property. Hypothetically, if I found a property with strong rental demand, the income could cover loan payments, operating expenses, and generate a modest positive cash flow.

While this example involves upfront risks, the idea would be to leverage my father’s expertise as a contractor to minimize renovation costs, boost the property’s value, and create a long-term asset that appreciates over time. The modest cash flow could be reinvested, eventually allowing me to build a portfolio of income-generating properties.

I recognize your point about needing $2.5M–$3M in cash to consistently replace a six-figure income. My approach isn’t aiming for an overnight transformation but rather a gradual strategy where I reinvest equity gains and cash flow into scalable opportunities. I’m also open to alternative strategies, such as private lending or passive investments in funds, to diversify and balance risk.

Does this phased approach seem reasonable given the higher HELOC rate? Or are there other methods you’d recommend that could align better with my goals?

Seth Singer · Answer

Hey Anthony, if you have 500k in equity I would do a cash out refi and recycle the money. Assuming you could take out a couple 100k you would have the buying power to start a cash recycling business (brrring or flipping). I’m not sure how good either are in your area but it sounds like you have a great connection with your father. The hardest part of flipping is knowing a good contractor. It sounds like you already got the hard part done!

Larry Cheshier · Answer

Yes, that is a good point.  Depends on what you have to pay for your money, may not be worth it. If you like, let me know what return you need to make it profitable for you and I will check with one of the groups I work with to see if there is something that can be done.

May we all know the love and salvation of Yeshua - HalleluYah!!! Obey Torah

Anthony Maffei · Answer

That’s interesting Larry but the issue becomes interest rates to borrow the money wouldn’t make this a valid choice. Am I wrong?

Larry Cheshier · Answer

Anthony,

I am new here to BP. I buy and sell real estate notes. You may want to consider purchasing one or two year notes with yield of 6-8%.  Let me know if you are interested.

May we all know the love and salvation of Yeshua - HalleluYah!!! Obey Torah

Best, Larry Cheshier

Jonathan Soto · Answer

just sent you a message

Anthony Maffei · Answer

Appreciate that. Interested. Mind shooting me a PM?

Chris Seveney · Answer

I am going to come at this in a different light. If you leverage it by borrowing are you making any $? What is the interest rate on borrowing compared to the rate you are earning, then take into consideration the tax consequences.

If you are in low to mid six figures say $250k a year -   you would need around $2.5  - $3M in cash to make the similar income consistently and without significant risk.

Jonathan Soto · Answer

i have done a 1031, i can connect you with my contact for you can discuss and prepare accordingly

How to Best Leverage $500k in Equity for Additional Income

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