There are several alternatives that become available to investors who acquire investment homes and see their equity grow. Those equities could have been created by buying home as an owner occupant, using seller financing, or a number of other ways. The result is, however, that they now have equities that control only one property and may have more productive investment alternatives such as:

1. Increase Value: They could exchange the equities into other properties, either greater in number or greater in value. Often a real estate investor finds that by exchanging the equity of one property into other properties, it may increase his future rate of return. This could be as a result of future appreciation, additional cash flow, greater equity build-up, or additional tax savings by acquiring an increase in depreciable assets.


2. Withdraw Equity: They could refinance and pull equity out of the property, then use that equity to invest in other properties. Refinancing a rental property and taking cash out of the investment in this way is anon-taxable event at the time of refinancing. In other words, the cash proceeds may be used in a manner desired without having to pay taxes on the cash received.


3. Use as Collateral: They could even use the equity as additional collateral, or even the only collateral offered in the purchase of other properties. It stands to reason that if sellers are willing to accept financing secured by their own property, that financing secured by other properties may be just as secure or even more so. There are several opportunities to use the equity in one’s rental home. The following may be just a few:


1. If a seller is reluctant to carry back financing, additional security may be provided by the rental home. The improved security makes it so a purchase has more to lose in the event of a default.


2. If a seller does not need cash, consideration offered to purchase a property could be a note created by equity in another property.


3. A note could be created and sold to an investor who purchases mortgage. This creates the cash to buy another property.