Real Estate Discussions with Chopper Russo

Turning Home Equity Into an Investment Property

Q: Can I use my home equity to buy an investment property?

It's a strategy some homeowners pursue, borrowing against accumulated equity to fund a down payment on a rental. Whether you can, and whether you should, depends on what a lender will approve based on your full financial picture, and on whether the numbers work for your situation. It's worth noting that borrowing against your home means putting your home up as security.

Q: What are the risks of buying a rental property?

Several worth weighing seriously. Tenants aren't guaranteed, so vacancies, repairs, and non-payment happen. Two mortgages remain due regardless of what the rental earns. Property values can decline, and equity gains aren't permanent. And managing a rental is genuine work, whether you do it yourself or pay someone. These are questions for a lender, a CPA, and honest self-assessment before anything else.

A lot of Northern New Jersey homeowners are sitting on more equity than they realize. Some are asking whether it should be doing more than sitting. Here's an honest look at the strategy — including what has to line up for it to work.

Important: This page describes a strategy some homeowners consider — it is not investment, tax, or financial advice, and it isn't a recommendation. Whether any of this makes sense depends entirely on your finances, your risk tolerance, and your goals. Before acting, talk to a CPA about the tax side, a lender about what you'd actually qualify for, and an attorney about the transaction. We're glad to be one voice in that conversation, not the only one.

Why This Comes Up So Often Right Now

Something genuinely unusual happened to homeowners over the last several years. Home values climbed sharply while many owners were locked into mortgages they'd secured at historically low rates. The result: a lot of equity, accumulated without anyone doing anything.

The scale is real. Nationally, roughly 47% of mortgaged homes were considered "equity rich" — meaning the owner holds at least a 50% stake — as of mid-2025, compared to about 27.5% five years earlier. New Jersey homeowners have been among the biggest gainers in the Northeast.

Which raises a fair question, and it's the one Chopper puts to people: that equity isn't earning anything sitting there. Should it be working?

The Strategy, Plainly

Use accumulated equity to acquire a property that generates income.

The concept is straightforward: rather than leaving equity idle, some owners borrow against it to fund a down payment on a rental property. The rental income offsets carrying costs, and the owner ends up with a second asset instead of a bigger number on a statement.

Chopper's own team lives this — most of his agents own investment properties, some of them in their twenties. As he puts it, they put their money where their mouth is.

But he's equally clear on what this isn't: it's not an ATM. This isn't about pulling cash out for a trip to Atlantic City or Vegas. The entire premise is redeploying an asset into another asset — and that only makes sense if the numbers actually work.

An Honest Both-Sides Look

Anyone selling you only the left column isn't being straight with you.

Why People Do It

Equity sitting idle isn't generating income
Rental income can help carry the property
You hold a second appreciating asset, not just a bigger number
There are tax considerations worth discussing with a CPA — depreciation among them
Real estate is an asset class you may already understand better than most

What Has to Be Weighed

Borrowing against your home puts your home at risk. That's the trade being made.
Equity is paper until you sell or borrow — and selling costs eat into it
Equity-rich doesn't mean permanently equity-rich; markets move both directions
Tenants aren't guaranteed. Vacancies, repairs, and non-payment are real
Being a landlord is a job, whether you do it or pay someone else to
Two mortgages means two mortgages, regardless of what the rental does

The Part People Miss About Equity

Equity feels like money. It isn't — not until you do something with it. It's a paper figure representing the gap between what your home is worth today and what you owe. If you sell, transaction costs and potential capital gains take a bite out of it before anything reaches you. If you borrow, you've added debt secured by the roof over your head.

And it isn't permanent. Equity-rich markets can and do soften. Homeowners in some states have watched their equity-rich share decline meaningfully in a single year. Anyone treating today's number as a floor is making an assumption, not a plan.

What Actually Has to Line Up

If you're seriously considering this, these are the questions that decide it:

Can you carry it if it sits empty? Not "will it rent" — can you absorb months where it doesn't.
What do you actually qualify for? A lender answers this, not a calculator and not an agent.
What does your CPA say? The tax picture is genuinely individual, and it's the piece people most often get wrong from internet advice.
Do the numbers work at today's rates? Your existing low rate doesn't follow you onto a new loan.
Do you want to be a landlord? Or pay someone to be one, which changes the math.
What's your exit? Every investment needs one before you enter.

Where We Fit

We're not your CPA and we're not your lender. What we are is the people who know this market — which towns, which property types, what actually rents in Northern New Jersey and what sits. Chopper is happy to get into real depth on this, and there's a lot of depth to get into.

If the idea of putting idle equity to work is rattling around in your head, that's a conversation worth having with your eyes open. Call us, and let's look at it honestly — including the parts that argue against it.

Investment Property FAQs

Can I use my home equity to buy an investment property?

It's a strategy some homeowners pursue — borrowing against accumulated equity to fund a down payment on a rental. Whether you can, and whether you should, depends on what a lender will approve based on your full financial picture, and on whether the numbers work for your situation. It's worth noting that borrowing against your home means putting your home up as security.

Why do so many homeowners have significant equity right now?

Home values rose substantially over the past several years while many owners held mortgages locked in at low rates. Nationally, roughly 47% of mortgaged homes were considered equity rich (a 50%+ ownership stake) as of mid-2025, compared to about 27.5% five years prior. New Jersey homeowners have been among the larger gainers in the Northeast.

Is home equity the same as cash?

No, and this is an important distinction. Equity is a paper figure — the difference between your home's current value and what you owe. It only becomes usable if you sell or borrow against it. If you sell, transaction costs and potential capital gains reduce what you actually receive. If you borrow, you're adding debt secured by your home.

What are the risks of buying a rental property?

Several worth weighing seriously. Tenants aren't guaranteed — vacancies, repairs, and non-payment happen. Two mortgages remain due regardless of what the rental earns. Property values can decline, and equity gains aren't permanent. And managing a rental is genuine work, whether you do it yourself or pay someone. These are questions for a lender, a CPA, and honest self-assessment before anything else.

Are there tax benefits to owning a rental property?

There are tax considerations that come with rental property ownership, including depreciation, and they're worth understanding. But they're highly individual and depend on your overall tax situation. This is squarely a CPA conversation — not something to plan around based on general information.

Video transcript

Hey, it's Chopper Russo at RE/MAX Select. One of the things I'm proud about with my team members: most of them own investment properties. And you know what? Some of them are in their 20s. God bless them. I mean, it works. It shows how much we love what we do — that we put our money where our mouth is.

So many of you out there have fantastic mortgage rates — three and a half percent, two and three quarters, whatever. But if you bought your house prior to 2020, you're looking at significant equity.

Now, I'm not looking for you to turn it into an ATM and go down to AC or go to Vegas. What I'm saying to you is: why don't you take that equity and make it work? Because for as much as your house appreciates every year, it's really not making you any money.

So let's grab that equity and let's get you an investment property. Let somebody else help pay the mortgage. Let's take a little pressure off of you. Plus, there are tax considerations with depreciation and what have you.

Listen, I can get into depth with this. Give me a call and we'll work it out. Take the money you're sleeping on top of and make it work for you. Okay? Give me a call and have a beautiful day.

Note: specific equity percentages and rate figures mentioned reflect general examples and vary significantly by purchase date, location, and individual circumstances. Nothing here is investment or tax advice — consult a CPA and a lender regarding your own situation.

Want to Talk It Through Honestly?

We know this market — what rents, what sits, and where. Let's look at it with your eyes open, including the parts that argue against it. No obligation.

📞 (201) 240-5200 ✉️ Email the Team

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