Anyone Used a Securities-Backed Loan + Cash-Out Refi Strategy to Buy Rentals?

[Ian Henderson]

Hey BP community,

I’m exploring a creative financing strategy and was wondering if anyone here has firsthand experience with this approach — or any insights on potential pitfalls or advantages.

Here’s the general idea:

1. Use a securities-backed line of credit (SBLOC) against my investment portfolio to purchase a rental property.
2. Once the property is stabilized (rented and possibly improved), do a cash-out refinance to pay back the SBLOC and effectively recoup my initial investment.

In theory, this seems like a way to:

• Move quickly on deals (cash offers are attractive)
• Avoid triggering a taxable event by selling securities
• Retain the upside of the invested portfolio while acquiring real estate

But I’m curious:

• Has anyone on here actually used a securities-backed line of credit (SBLOC or similar) to purchase a rental property?
• How did it go when you refinanced — any surprises from lenders?
• Were there any issues with timing or risk (e.g., if the market drops and the margin call risk goes up)?
• Any lenders or banks you recommend that are investor-friendly when it comes to this kind of setup?

Appreciate any feedback or experiences, I want to be thoughtful and strategic before pulling the trigger.

Looking forward to hearing from others who’ve tried this — thanks in advance!