Invest in real estate because real estate can be a great wealth-builder. A good one is a home equity loan on investment property. Learning how to tap into your home’s equity can maximize your return on real estate investment for beginners in 2025.
This guide can help take you through everything you need to know, from understanding what home equity loans are in the first place to how they may work within your investment strategy in 2025.
“You can’t lose real estate, you can’t steal real estate, and you can’t ride it away. Purchased with common sense, paid for in full and with reasonable care, it is about the safest investment in the whole world.” — Franklin D. Roosevelt
A home equity loan allows you to borrow against your home equity. Equity is the gap between your home’s market value and the amount you owe on your mortgage.
For example: If your home is sold for $300,000 and you owe $200,000 on your mortgage.
“If used wisely, home equity can make a house a farm team for bigger financial goals.”— Barbara Corcoran
2024 Home Equity Loan Statistics
| Metric | 2023 | 2024 | Source |
| Average Home Equity Loan Amount | $150,000 | $160,000 | National Association of Realtors |
| HELOC Utilization Rate | 65% | 70% | Federal Reserve |
| Average Interest Rate (%) | 5.5% | 5.3% | Mortgage Bankers Association |
| Approval Rate (%) | 78% | 80% | Experian |
| Average Loan Term (Years) | 15 | 15 | HomeEquityLoan.org |
| Default Rate (%) | 2.1% | 2.0% | Fannie Mae |
There can be several reasons why leveraging Land Loan Interest Rates Affect Your Property Investment Costs:
Investment Property Returns Using Home Equity Loans
| Investment Type | 2023 Average ROI (%) | 2024 Projected ROI (%) | Source |
| Residential Rental Property | 8.5% | 9.0% | Real Estate Investment Trusts (REITs) Report |
| Commercial Property | 7.2% | 7.5% | National Association of Realtors |
| Vacation Rentals | 10.0% | 10.5% | Airbnb Market Insights |
| Multi-Family Units | 9.0% | 9.3% | Urban Land Institute |
One popular way to using home equity for down payment on new home in South Carolina. Because you will access equity in your current home.
This will lessen the amounts you will need to pay to finance your investment property, and also potentially decrease even your monthly mortgage payment.
Home Equity Loan Usage in 2024
| Usage Category | Percentage of Total Loans (%) | 2024 Projection (%) | Source |
| Home Renovations | 35% | 36% | Federal Housing Finance Agency |
| Debt Consolidation | 25% | 24% | Consumer Financial Protection Bureau |
| Investment Property Down Payment | 20% | 21% | Bankrate |
| Education Expenses | 10% | 9% | National Association of Realtors |
| Other Purposes | 10% | 10% | HomeEquityLoan.org |
The time it takes to secure a home equity loan varies. On average, the process can take anywhere from two to six weeks. Factors influencing the timeline include:
Interest Rate Trends for Home Equity Loans (2023-2024)
| Month | Average Interest Rate (%) | Yearly Change (%) | Source |
| January | 5.5% | -0.2% | Mortgage Bankers Association |
| April | 5.3% | -0.1% | Federal Reserve |
| July | 5.4% | +0.1% | Bankrate |
| October | 5.3% | -0.1% | National Association of Realtors |
A home equity agreement is an alternative to traditional home equity loans. Instead of borrowing money, you receive a lump sum or monthly payments in exchange for a share of your home’s future appreciation. This can be beneficial if you prefer not to take on additional debt.
Rental Income vs. Mortgage Payments (2024)
| Property Type | Average Monthly Rental Income ($) | Average Monthly Mortgage Payment ($) | Net Monthly Income ($) | Source |
| Single-Family Home | $2,500 | $1,800 | $700 | Zillow Research |
| Condo | $1,800 | $1,200 | $600 | Realtor.com |
| Multi-Family Unit | $3,500 | $2,000 | $1,500 | Urban Land Institute |
| Commercial Property | $5,000 | $3,200 | $1,800 | National Association of Realtors |
To get the best returns from your investment property, consider these strategies:
Cash equity refers to the amount of equity you have in your home that is available as cash through a loan or sale. This cash can be reinvested into additional properties, diversifying your investment portfolio.
At Redhead Home Properties, we specialize in helping investors maximize their returns through smart property acquisitions and strategic financing solutions. Let us guide you on your investment journey for the best outcomes in 2025.
Real estate is a long-term investment. Patience and consistent management are key to maximizing returns. Regularly review your investment strategy to adapt to market changes and optimize your portfolio.
How to Leverage a Home Equity Loan on Investment Property in 2025. With the right knowledge, mechanisms, and practices in place, you can make a lot of profit out of this venture, establishing yourself on the road to wealth!
All strategies should be adapted to your specific needs and objectives and always work with a financial advisor to personalize them for your own circumstances.
Can you use your home equity to cover the down payment of a new home or investment property, so you borrow less?
The time to get a home equity loan is usually two to six weeks, varying by lender and your finances.
Advantages can include reduced interest rates, possible tax breaks, and liquid access to a large sum of cash for investment purposes.
Yes, you can use home equity loan money to make improvements to rental properties, thereby increasing their value and potential rental income.
Your credit score, loan amount, loan type and current market conditions will all play a role in determining interest rates.
Yes there is risk, like potential foreclosure if you are unable to make a payment and the possibility of reduced home equity if property values fall.
