Can I Use a HELOC for REITs or Crowdfunded Real Estate Investing?

Last updated: June 2025

Whether you’re in California, Florida, or anywhere in between, real estate investing has never been more accessible. With platforms for REITs and crowdfunded properties growing nationwide, homeowners from coast to coast are asking: Can I use a HELOC to get started in REITs or crowdfunded real estate investing?

If you’ve built equity in your home, especially in high-growth markets, it could be the key to unlocking new investment opportunities without selling or refinancing. 

In this article, we’ll explore how homeowners across the U.S. are leveraging HELOCs for passive real estate investing, what to consider before you do, and how HomeEQ’s digital platform can make the process simple and secure.

What is crowdfunded real estate investing?

Crowdfunded real estate investing allows individuals to pool money with other investors to fund property projects. 

These platforms make it easy to invest in real estate assets that would otherwise require significant capital, such as office buildings, multifamily housing, or fix-and-flip projects.

There are two popular options in this space:

1. REITs (Real Estate Investment Trusts): Professionally managed funds that own and operate income-producing properties. Traded REITs behave like stocks and can be bought through brokerage accounts.
2. Crowdfunding platforms: Online marketplaces that offer fractional ownership in specific real estate deals. Some focus on debt (you earn interest), while others focus on equity (you earn a portion of the returns if the property sells or generates income).

Both approaches offer accessibility and passive income potential, making them attractive to investors who want to diversify without becoming landlords.

Can you legally use a HELOC for real estate investing?

Yes, in most cases, you can use a HELOC to fund REIT purchases or invest through crowdfunding platforms. 

A HELOC gives you flexible access to your home equity, and once approved, you can typically use those funds however you choose—whether it’s consolidating debt, remodeling your home, or investing.

HomeEQ offers a fully digital HELOC designed for convenience, transparency, and speed. 

As long as your credit, income, and equity position meet the lending criteria, funds are deposited into your account and can be used at your discretion. 

With HomeEQ, borrowers can explore their options freely as long as they remain financially responsible.

The benefits of using a HELOC to invest in REITs or crowdfunding

Using a HELOC to invest in passive real estate assets may offer several strategic advantages:

• Liquidity access without selling your home: A HELOC lets you access capital without liquidating assets or selling stocks—helpful for investors looking to diversify quickly.
• Potential for passive income: REITs and crowdfunded real estate deals often pay dividends or offer yield-based returns. This can create a new stream of income from borrowed capital.
• Portfolio diversification: Adding real estate to your investment mix reduces dependence on the stock market. It’s a way to hedge against inflation or market volatility.
• Flexible repayment terms: HELOCs typically come with interest-only payments during the draw period. This flexibility enables investors to manage their cash flow as their investments grow.

The risks and considerations before using a HELOC to invest

Just because you can use a HELOC to invest doesn’t always mean you should—at least not without careful consideration. 

Here are some key risks:

• Investment returns are never guaranteed: Real estate markets fluctuate. If your REIT or crowdfunded investment underperforms, you’ll still owe your HELOC balance, plus interest.
• HELOC interest rates can rise: Most HELOCs have variable interest rates. If rates increase, so do your monthly payments. Compare your HELOC rate against projected returns before making an investment.
• Home risk: Since your home secures the HELOC, defaulting puts your property at risk. Always ensure you can repay the loan regardless of how the investment performs.

Hypothetical example:

You draw $25,000 from your HELOC to invest in a crowdfunded equity deal promising a 10% annual return. If the deal performs as expected, you net $2,500 per year while paying, say, 7% interest ($1,750/year). 

That’s a positive return. But if the deal stalls or defaults, you could be left repaying the entire balance without any gain. This kind of scenario highlights the importance of responsible investing and risk tolerance.

Best practices for using your HELOC for real estate investing

If you decide to tap your home equity for REITs or crowdfunded deals, here are a few strategies to protect your financial health:

• Cap your exposure: Don’t max out your HELOC for speculative investments. A safe approach is to use only a portion of your available credit—say 20–30%.
• Run the math: Calculate your HELOC’s interest rate and repayment schedule. Compare that to your projected returns. Ensure the spread is worth the risk.
• Vet the investment platform: Choose crowdfunding platforms with strong due diligence, track records, and transparency; look for SEC-compliant offerings and audited performance.
• Diversify your investments: Spread your funds across multiple REITs or properties rather than putting everything into one deal—this helps reduce risk exposure.

Set a repayment plan: Even if you’re in an interest-only period, make a plan to pay down the principal, especially if your investment is illiquid.

Explore how your home equity could support your financial goals

Using a HELOC for crowdfunded real estate investing is possible, but it requires clear planning, risk awareness, and smart execution. For the right investor, it’s a way to unlock equity and put it to work.

HomeEQ offers a fully online, easy-to-use HELOC platform with fast approval and transparent terms, allowing you to access your funds and invest with confidence.

Check your rate in minutes, or learn how the HELOC process works to get started today.