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This spring market, creativity is the name of the game for me, my team and my national mastermind group. With interest rates in flux, inventory at historic lows, and headline-making real estate lawsuits and settlements in the mix, it is more important than ever to think outside the box and provide strategic opportunities to clients that are grounded in data and ideally time-tested.
One recent strategic, creative and free idea that my team and I initiated is reminding and educating our clients about the opportunities that home equity lines of credit (HELOC) provide.
What is a HELOC?
A HELOC allows homeowners to borrow against built-up equity in a home, typically with an interest-only payment. You can then buy a second home or an investment property, creating a new passive income stream and growing an investment portfolio.
Alternatively, you can also use a HELOC to renovate an existing home, creating additional equity and higher potential sales value. In all scenarios, HELOCs are a great way to capture equity without moving or selling an existing home.
Harnessing the power of equity
In Chicago, we have seen an average of 21 percent appreciation since 2021, which is lower than many other cities have experienced. After brainstorming, our goal became to inform our clients of this news and provide examples of ways to use it to their benefit. I can’t think of a better way to show clients literal value.
Sharing the news with clients
I recommend creating a list of clients who bought a home at least five years ago. Draft a simple email or letter outlining the appreciation your area has experienced and the specific benefits of a HELOC. You could also consider working with a lender to generate an even larger impact.
Looking for a sample letter to help you get started? Here’s what we’ve sent and posted on our website:
Hi there,
I hope you’re doing well!
We are in the midst of the spring market in Chicago, which means that every day my team and I are putting together creative transactions that benefit everyone involved – one of my favorite parts of real estate!
Since you purchased your home several years ago, I am excited to share with you that Chicago properties have seen an average of 21% appreciation since 2021. This is great news as this means you have added equity in your home!
Some of our clients are asking us how they can creatively use their equity even if they don’t want to move or sell their current home. One example we have given clients recently is a Home Equity Line of Credit (HELOC). As you may know, with a HELOC, you borrow against the equity in your home, usually with an interest-only payment. We have had clients use a HELOC to buy investment properties and/or second homes, and are thrilled with the outcome. Those who have purchased investment properties with their HELOC are making their appreciation work for them by owning income-generating properties.
If you would like to explore this opportunity further or strategize in general (one of my favorite things to do!), please let me know. I am happy to make an introduction to one of the lenders we work with frequently – we love our short list of lenders because they are all incredibly knowledgeable, creative and communicative.
I look forward to hearing from you and hope you’re well.
Next steps beyond HELOC
Even clients not interested in HELOCs appreciate the creative and resourceful thinking. After we emailed about HELOC opportunities, some clients responded and asked questions about other types of investing — we just had to get their wheels turning. Introducing your client to a creative lender you trust is a great next step.
In summary, HELOCs are a great example of creative thinking that is more important than ever for real estate agents and brokers. Adding value and a different perspective shows clients you are thinking about them and hopefully simultaneously creates a new stream of business.
Julie Busby is the founder and president of Busby Group, and in the top 1 percent of Chicagoland brokers. Follow her on Facebook and LinkedIn.
