What is a Home Equity Investment (HEI), and how can I use it?
- Denver McClure
- 7 days ago
- 2 min read
What is a Home Equity Investment (HEI)?
A Home Equity Investment (HEI) from Point Financial allows real estate investors to access their property’s equity without traditional loans. Instead of monthly payments or interest, Point provides a lump sum ($30,000–$500,000) in exchange for a share of the property’s future appreciation. Repayment occurs at the end of a 30-year term, when the property is sold, refinanced, or through other funds, with no prepayment penalties. Point evaluates the property’s value and potential, requiring a minimum credit score of 500. If the property appreciates, you repay the initial amount plus a portion of the gain; if it depreciates, Point shares the loss, potentially lowering repayment. A Homeowner Protection Cap limits the maximum repayment, safeguarding investors.
Why HEI Benefits Real Estate Investors
An HEI unlocks equity for investors, offering flexibility to grow portfolios or manage cash flow. Here’s why it’s valuable:
1. No Monthly Payments
With no monthly obligations, investors can use HEI funds to pay off high-interest debts or fund property upgrades, improving cash flow without added strain.
2. Flexible Qualification
Point’s HEI requires only a 500 credit score and no income verification, ideal for investors with complex finances or lower credit who struggle with traditional loans.
3. Portfolio Growth
Use funds for down payments, renovations, or diversifying investments, enabling strategies like BRRRR (Buy, Rehab, Rent, Refinance, Repeat) without draining savings.
4. Investment Property Access
Unlike many loan products limited to primary residences, HEI works for rental properties (1-4 units), helping investors leverage equity in their portfolios.
5. Long-Term Flexibility
The 30-year term allows repayment through sale, refinance, or other means, with no penalties for early settlement. It’s also assumable, ensuring continuity.
6. Market Protection
The shared-risk model means Point absorbs part of any depreciation, and the repayment cap protects investors if property values soar.
Who Should Consider an HEI?
An HEI suits:
Equity-Rich, Cash-Poor Investors: Those needing liquidity without monthly payments.
Non-Traditional Borrowers: Investors with credit scores as low as 500 or irregular income.
Portfolio Expanders: Those seeking funds for new properties or renovations.
Long-Term Holders: Investors holding properties for years, benefiting from the 30-year term.
Rental Property Owners: Those with equity in investment properties.
Considerations
Shared Appreciation: You share future property gains with Point, which could reduce profits.
Costs: A processing fee (up to 3.9%, minimum $1,000) and closing costs apply.
Risks: Non-repayment could lead to foreclosure, though Point avoids this when possible.
Real-World Example
An investor with $200,000 equity in a $500,000 rental property receives $100,000 from Point (after fees). They use it to renovate, boosting rent by $400/month, and buy another property. With no monthly payments, cash flow improves. If the property appreciates to $600,000 in 10 years, they repay the $100,000 plus a capped share of the gain. If it depreciates, repayment may be less.
Conclusion
Point Financial’s HEI empowers real estate investors to unlock equity without debt, offering flexibility to grow portfolios, manage cash flow, and navigate market changes. Ideal for those with equity in investment properties or non-traditional financial profiles, it’s a strategic tool for long-term success. Prequalify in 60 seconds on Point’s website, with no credit score impact, to explore this option. Link Below!