How to take advantage of $100,000 home equity?

3 Replies

Hello brilliant investing minds,

I have an interesting scenario for you. Say you have a home that you are given free and clear that is paid off and is valued around $100,000. But here is the catch. You are given this home by a relative, and the relative wants to continue living in the home. What is the safest way to tap into the equity of the home for a secure, relatively liquid investment in which the relative's housing is not put at risk and where an equity loan could easily be paid off and the house be sold if necessary? Note: I assume that in the case of a home equity loan the ROI would have to regularly exceed interest payments.

With a Heloc (Home Equity Line of Credit) You only get charged interest on the money you use. I have one on my house for back up in case I get in over my head on an investment. The interest is pretty low too. I would use it to fully fund a few flips until you don't need to use those funds any more. I believe you should be able to pull out 80k? I forget the % they allow. You could also look into the BRRRR strategy. There are many posts on BP on that topic, so I won't waste your time on explaining that.

I think you just got an amazing kick in the pants to get started in the biz.  Good luck my friend  

Thanks, Reed! I definitely believe there is an incredible opportunity in the situation stated, even if one were to not sell the house. I think finding a secure route not too complicated for a beginner--in my case--would be crucial. Response appreciated.

I agree with Starkey. a HELOC is going to be your easiest and safest route is the home is already free and clear. I you get the HELOC and change your mind, no harm no foul, as long as you haven't pulled any money out of it, it doesn't cost you too much or create a recurring payment or mortgage due.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you