You can access equity through a total refinance, a Home Equity Line of Credit (HELOC), or a consolidation mortgage (all-in-one mortgage). The right structure depends on your goals, but many investors use a line of credit combined with their existing mortgage so they can take out small chunks strategically over time to purchase properties where the numbers work.
Responsible equity use means ensuring the investment property generates enough rental income to cover all expenses, including the interest on the borrowed equity, property taxes, insurance, maintenance reserves, and the new mortgage payment. You must also build a buffer for potential vacancies and interest rate increases so you are not pouring personal money into the property each month.
Dalia Barsoum shares that waiting six years to pull the trigger on investing—and choosing not to use available equity—cost her approximately $427,000 in lost appreciation and portfolio growth. Waiting to save cash instead of strategically leveraging equity can significantly delay wealth building and reduce your total returns over time.
While short-term strategies like rent-to-own exist, Dalia recommends holding leveraged properties for at least five years, and ideally longer. The real power of leverage appears after five years when mortgage paydown accelerates, cash flow improves, and rent increases compound, leading to substantially higher total returns.
The specific strategy—whether student rentals, rent-to-own, or buy-and-hold—matters less than the cash flow numbers. As long as the property's revenue minus all expenses, including the cost of borrowing on your line of credit, is positive or ideally cash-flowing, the strategy can work.
