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Rental property equity
Home Equity Investments (HEIs) for Rental Properties, Explained
How Hometap, Point, and Unlock home equity investments work, how they treat rental properties, and how selling equity on a marketplace compares.
Jerry Chu
Co-founder & CEO, Lofty
How a home equity investment works
An HEI provider pays you a lump sum today, typically up to 15-25% of your property’s value, in exchange for a contractual share of the property’s future value. There are no monthly payments and no interest rate. Instead, the bill comes due as a single settlement when you sell the property, refinance, or reach the end of the term, which runs 10 years at Hometap and up to 30 years at Point and Unison.
What HEIs cost
Providers charge an origination fee around 3-5% plus appraisal and closing costs, and the settlement is where the real cost lives. Because the provider takes a percentage of the future value, strong appreciation makes the payoff large: independent analyses regularly estimate effective annual costs in the mid-teens or higher in strong markets. Most contracts include caps or adjustments, but the core dynamic stands: the better your property performs, the more you pay.
How HEIs treat rental properties
Hometap and Point both accept some non-owner-occupied properties, and Unlock focuses mainly on owner-occupied homes. Rentals get stricter underwriting: lower investment amounts relative to value, tighter property standards, and pricing that reflects the added risk. LLC-owned properties are often excluded entirely, which rules out many serious rental investors.
Selling equity instead: no settlement, no term
On Lofty, rental owners sell actual ownership rather than a claim on future value. You choose the percentage and the price, investors buy shares, and the transaction is complete: there is no lump-sum settlement later, no term expiring, and no balance growing with your property’s value. Investors earn their share of rent and appreciation on what they bought, you keep the rest, and you can buy your equity back or sell the property whenever you choose. The marketplace fee is 3% of what you sell.
HEI providers vs. selling equity
Hometap
- Best for
- Primary homes and some rentals; up to $600k; 10-year term.
- Tradeoff
- Settlement due within 10 years; rentals face tighter limits.
Point
- Best for
- Flexible credit (500+) and terms up to 30 years.
- Tradeoff
- Share of future value grows expensive in appreciating markets; no LLC-owned properties.
Unlock
- Best for
- Owner-occupied homes with credit as low as 500.
- Tradeoff
- Focused on primary residences; limited fit for rental owners.
Sell equity on Lofty
- Best for
- Rental owners who want cash with no settlement, term, or debt.
- Tradeoff
- Investors permanently own the share sold unless you buy it back.
Risks of equity-sharing deals
- HEI settlements are open-ended: strong appreciation means a much larger payoff, and many owners underestimate this when signing.
- Terms have deadlines. If you cannot sell or refinance when the term ends, you may be forced to transact on a timeline you did not choose.
- HEI contracts vary significantly between providers on caps, adjustments, and maintenance clauses. Read the specific contract, not the marketing page.
- Selling equity on a marketplace shares future rent and appreciation on the portion sold, and buyback happens at market price, which may be higher than what you were paid.
- Any equity transaction reduces your stake in future upside. Model the scenario where your property appreciates strongly before deciding how much to convert to cash.
Real estate calculators
Frequently asked questions
- Do Hometap, Point, or Unlock work on rental properties?
- Hometap and Point accept some non-owner-occupied properties with stricter underwriting and lower limits. Unlock focuses primarily on owner-occupied homes. Properties held in LLCs are commonly excluded, which affects many rental investors.
- How is selling equity on Lofty different from a home equity investment?
- An HEI is a contract entitling the provider to a share of your property’s future value, settled in a lump sum later. On Lofty you sell actual ownership now: investors own the share they bought, share its rent and appreciation, and nothing comes due later. There is no term, no settlement, and no debt.
- What does a home equity investment cost?
- Typically a 3-5% origination fee plus closing costs upfront, then a share of the property’s future value at settlement. In appreciating markets, analyses often estimate the effective annual cost in the mid-teens or higher. Lofty charges a 3% marketplace fee, and the ongoing cost is the rent and appreciation on the share you sold.
- What happens at the end of an HEI term?
- You must settle the investment: pay the provider its share of the current value using savings, a refinance, or by selling the property. Owners who cannot refinance or do not want to sell can be squeezed by the deadline. Selling equity has no equivalent deadline.
- Can I buy my equity back after selling it?
- On Lofty, yes: you can buy shares back through the marketplace at market price and regain full ownership. With HEIs, most providers allow early buyout of their position, calculated on the current appraised value under the contract’s terms.
About Jerry Chu
Jerry leads Lofty, a fractional real estate investing platform used by tens of thousands of investors. He writes about how everyday investors can access rental property income without the friction of becoming a landlord.
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