I'm looking for the best option (good risk/reward ratio). So far, I've considered;

  1. using it partially as a down payment and partially towards remod on a house flip (Seattle suburbs area)
  2. buying a small business that can be run semi-absentee (froyo shop, car wash, etc)
  3. using it as a down payment for a rental property

What is the best option of these or others I have not thought of? Thanks for your time!

  • 3
    The risks associated with each option are fairly difficult to calculate and since all are predicated on taking more debt that is secured by your primary residence the risk is even greater. I'd say this question is too broad/subjective to be a good fit here. – Hart CO Jan 18 '19 at 22:35
  • Welcome Loady. Sadly, I agree with @HartCO. There are at least two independent parts to this question, both very broad and subjective. (1) Should I raid equity from my house to invest in another venture - which is essentially upping your leverage since you have the same amount of total equity but now are exposed to risk on the home value AND the alternative investment value, and (2) What is the best way to invest $100k. The second is FAR too broad and subjective. And the first is also very broad, and depends entirely on your tolerance for risk and leverage. – jaypops96 Jan 18 '19 at 23:41

If you want to cash out your equity, then sell your home and buy another one that's $100k cheaper.

It is a mistake to think of home equity as an asset in terms of being able to generate income. There are only two ways to monetize this "asset" - borrow against it and sell it. Borrowing against it for a risky investment puts your home in jeopardy. If the business fails of the investments go bust, your creditors can foreclose on your house to fulfill the loan. Not a wise idea.

So that leave selling the house.

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It is already making income for you.

  1. You are living in the house, and don't pay anything for that share of it.
  2. The value of the house increases (in average) slowly, so the amount increases too.

Effectively, you are already double-dipping on that value. There is no way to make it work a third time in parallel, without taking on the respective risk - borrowing against it forces you to pay interest, and selling it forces you to pay rent (or live smaller).

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