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US-based investment firm Hometap on how helping homeowners access their equity, debt free, can create promising opportunities for credit-oriented investors

The US residential real estate market is one of the most resilient, reliable, and valuable alternative asset classes — and presents opportunities for not only homeowners, but investors too. Like multi-family properties decades ago, single family homes are becoming as viable and profitable as commercial property. Strong price growth has led to significant equity increases, with untapped equity valued in the multi-trillions.

While residential real estate is a compelling asset class for investors, it has historically been difficult to access without purchasing properties directly — and challenging to scale due to market cycle risks.

Home equity investments (HEIs) provide a unique, capital-efficient, and scalable route to residential home value growth for investors. In addition to meaningful downside protection, HEIs offer many of the same benefits as the broad real estate market, including inflation protection, geographic diversification, and attractive risk-adjusted returns. HEIs provide valuable portfolio diversification benefits due to low correlation to public equities and most major asset classes.

HEIs also go beyond the limitations of conventional financing options by allowing private investors to participate alongside homeowners. Homeowners receive the cash they need now in exchange for a percentage of the future value of the home over a set term, typically ranging between 10 to 30 years. Traditionally, when homeowners need to access their home equity for cash, those with excellent credit and flexibility may borrow from their equity with loans, lines of credit, or second mortgages. However, these options may not be desirable or possible for a large segment of homeowners who need (or want) to avoid additional debt. HEIs allow them to tap into their biggest asset — their home — without taking on monthly payments or interest.

In our white paper, A Guide to Home Equity Investments: The Untapped Real Estate Asset Class, we at Hometap cover the investment opportunity in untapped home equity and the growth of HEI in more depth. In this whitepaper, we explain how HEIs can help investors:

• Gain direct exposure to a multi-trillion-dollar pool of untapped home equity in a scalable manner
• Take advantage of near-term uncertainty in the housing market to create a favorable long-term investment opportunity that offers attractive economics
• Support mission-driven businesses that help average American homeowners strengthen their financial standing, while offering additional options for improving their livelihood without adding to their household debt.

Find out more here.

Since 2018, Hometap has provided investors with diversified exposure to the multi-trillion dollar residential real estate market by enabling them to invest in homes through its asset investment funds.

An industry leader, Hometap has made thousands of home equity investments (HEIs) in homes across 18 U.S. states, while giving investors the chance to participate in a growing asset class — and homeowners a fast, simple way to access their equity without a loan or sale of their home. With the total cost of homeownership rising, along with increasing interest rates and record-breaking household debt, Hometap provides a solution to the growing need for alternative financing solutions that allow Americans to tap into their biggest asset without monthly payments or interest.