I have quite a bit of equity and thinking about ways to utilize it. Recently learned about "home equity investment plans". The idea is you borrow a portion of your equity and instead of owing payments and interest like in a HELOC the lender gets an equivalent % of your future equity.
The one I'm looking at has a 5% origination fee and the term is for 10 years (no early payment penalty).
For simple math if my home is worth 1 million and I borrow 500K. I built a spread sheet for home value increasing 2%, 4%, and 8% and average annual investment returns of 2% - 40%. Factored in combined state and federal capital gains taxes.
Essentially my returns just need to beat equity growth by a modest margin and it appears to pencil out great.
I can copy a link to my spread sheet if anyone wants to check my numbers let me know.
Am I missing something?