How to Use a HELOC to Invest in Real Estate
If you’re sitting on equity in your home or investment property, you may be able to unlock it without selling and use it to invest in your next deal.
That’s where a HELOC (Home Equity Line of Credit) comes in.
For investors, a HELOC can be a flexible and low-cost way to access capital for real estate whether you're funding a down payment, covering renovation costs, or lending as a private investor on a project like the ones we develop at Ark Development Group.
Here’s how it works and how to set one up.
What Is a HELOC?
A HELOC is a revolving line of credit secured by the equity in your property. It’s like a credit card but backed by real estate and with much better terms.
With a HELOC, you’re not borrowing a lump sum. Instead, you get access to a credit line (usually up to 80–90% of your property’s appraised value, minus what you owe). You can draw funds as needed, repay them, and use them again during what's known as the "draw period."
Why Investors Use HELOCs
Access to Cheap Capital – Rates are typically lower than personal loans or credit cards.
No Monthly Payments Until You Use It – You only pay interest on what you draw.
Flexible Use – Can be used for down payments, renovations, bridge loans, or investing in development projects.
Liquidity Without Selling – Keep your real estate, but access the capital trapped in it.
Steps to Getting a HELOC
1. Check Your Equity Position
You typically need 15–20% equity in your home (some lenders require more).
Example: Your home is worth $600,000 and you owe $400,000 → you may be eligible for a HELOC of up to $80,000–$100,000.
2. Compare HELOC Lenders
Start with your current bank, but shop rates and terms.
Look at:
Interest rate (fixed or variable)
Draw period (typically 5–10 years)
Repayment period (10–20 years after draw ends)
Closing costs or annual fees
3. Get Preapproved
Lender will evaluate:
Credit score (usually 680+)
Debt-to-income ratio
Property value (may require an appraisal)
Employment/income history
4. Sign & Secure Your Credit Line
Once approved, you’ll close like any loan and your HELOC is now live.
You’ll receive access to a draw account or checks tied to the HELOC for easy access to capital.
5. Deploy Strategically
Use it to fund a down payment on a rental or flip
Partner in a passive real estate deal
Lend privately for double-digit returns with collateral (secured note or lien)
Reinvest returns to pay down the HELOC balance and repeat
Investor Tip: Treat It Like Leverage, Not Free Money
A HELOC gives you access to liquidity but you’re still borrowing against your home or property. Use it on deals where you’re confident in the outcome, whether that’s a new construction build, a value-add rental, or a private lending opportunity.
If you’re looking to earn strong returns without the hassle of owning or managing property, we’d be happy to walk you through how some of our investors use HELOCs as a funding tool for secure, passive income.
Want to learn how you could invest with a HELOC?
Reach out to Ark Development Group to explore how private capital partnerships work and how to safely leverage equity for growth.
This blog post is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities.
