Building Wealth: Turning Home Equity into an Investment Property

In today’s real estate market

Many homeowners are wondering how to grow their wealth without having to inject additional savings. One question often comes up:
Can you buy a multi-unit property (plex) with no cash down — using only the equity accumulated in your primary home?
The answer: yes, it’s possible — under certain conditions.

What is equity?

Equity represents the portion of your property that you truly own.
In other words, it’s the difference between your home’s current market value and the remaining balance on your mortgage.

For example:
If your home is worth $600,000 and you still owe $350,000, your equity is $250,000.
This amount isn’t liquid cash, but it can be used as leverage to finance a new real estate purchase.

Using equity to buy a multi-unit property

Financial institutions often allow you to use part of this equity as a down payment for a second property such as a duplex, triplex, or fourplex.
There are two main ways to do this:

1. Mortgage refinancing – You take out a new mortgage on your current home to access part of your equity.
   You can usually borrow up to 80% of the market value of your home, minus the existing loan balance.
   The withdrawn amount can then serve as the down payment for the plex.

2. Home Equity Line of Credit (HELOC) – A more flexible option that lets you borrow against your equity as needed, without having to fully refinance your mortgage.

A concrete example

Let’s take a simple scenario:

• Current home value: $700,000

• Mortgage balance: $400,000

• Available equity: $300,000

The bank might allow you to borrow up to 80% of your home’s value — that’s $560,000.
This means you could withdraw $160,000 ($560,000 – $400,000) to invest in a plex and cover the down payment, notary fees, and possibly even part of the renovations.

Conditions to meet

Even if you don’t need liquid savings, the bank will evaluate several factors before approving your loan:

• Your borrowing capacity (income, debts, debt-to-income ratio).

• The market value and stability of your current property.

• The projected profitability of the plex (expected rental income vs. expenses).

In short, equity is a powerful lever, but it doesn’t replace solid financial health or a strong application.

Advantages of this strategy

• Little to no cash required.

• Leverage effect: your home helps you acquire a second income-generating asset.

• Wealth growth: rental income helps repay the mortgage while increasing your real estate portfolio’s value.

Risks to consider

• Higher total debt, which can impact your budget.

• The risk of a decline in property values, which could reduce your equity.

• Greater responsibility from managing tenants and property maintenance.

In conclusion

Buying a multi-unit property with no cash down, using only the equity from your primary home, is absolutely possible — and can be a powerful way to build long-term real estate wealth.

However, like any major financial decision, it requires careful analysis, along with guidance from an experienced mortgage broker and real estate broker to help you navigate each step.

For any questions about this article or to obtain specific real estate advice, feel free to contact Dominique Marchand, your residential real estate broker at the company Royal LePage Tendance.

Dominique is at your disposal to assist you and answer all your questions about the real estate market in the regions of Montreal and Outremont. Thanks to her in-depth knowledge of these areas, she will be able to guide you effectively, whether you are looking to buy, sell, or simply get an evaluation of your property.

For direct contact, you can reach Dominique Marchand at (514) 621-2116. She is also available by email at dominique@royalepage.ca for professional exchanges.

Visit Dominique's website for more information: dominiquemarchand.ca. There you will find useful resources as well as properties currently on the market in the areas she serves.

Contact Dominique Marchand today for any questions or real estate needs in the regions of Montreal and Outremont. She stands ready to assist you with all your real estate endeavors with expertise and dedication.