Using Home Equity for Fix/Flip or rental property

[Shayan Sameer]

Hello everyone,

Happy New Year! I hope you all had a great start to 2025.

I have a question and would appreciate your input. I’ve done a couple of fix-and-flip projects in the past, both of which were financed through hard money lenders. While these deals were successful, I realized that the cost of using hard money significantly ate into my profits. In some cases, after crunching the numbers, the profit margin was so slim—or even negative—that I had to pass on some promising opportunities.

Here’s my situation: I currently own two properties—a primary residence and a rental property—both of which have substantial equity. I’m considering tapping into this equity to fund future fix-and-flip projects or even purchase another rental property.

My questions are:

1. Do you think leveraging the equity in my properties is a smart move for real estate investments?
2. Are there any potential risks or downsides I should keep in mind before proceeding?

I’d love to hear your thoughts, experiences, or advice on this approach.

Thank you in advance for your insights!