This could be the right time to tap into your home equity and increase your earning potential.
The dramatic rise in home values over the past few years has created an unprecedented opportunity for homeowners to leverage their property’s equity. After all, millions of Americans are now sitting on substantial wealth tied up in their homes, with the average homeowner having about $330,000 in home equity right now, according to recent data. For savvy homeowners, this stored wealth represents more than just paper gains – it’s also a potential springboard for increasing your earning power. Whether you’re looking to expand your income streams or invest in future wealth-building opportunities, your home equity can be a powerful tool, and tapping into it strategically can lead to considerable financial growth.
Using these strategies to leverage your home equity could boost your earning potential in the coming year.
- Convert space into a rental unit
One way to earn more money in 2025 is to transform your home – or part of it – into a revenue-generating asset. In areas with high tourism or business traffic, short-term rentals can generate substantial income, so finishing a basement, converting a garage or creating an accessory dwelling unit (ADU) can pay off. But even if you live in a quieter area, marketing your space as a retreat or remote work destination can attract guests year-round. And, the funds from your home equity are an easy and affordable way to finance these renovations. - Pursue advanced education or certifications
Investing in your education is one of the most effective ways to boost your earning potential. Whether you’re pursuing a master’s degree, professional certification or technical training, investing in your skills can lead to higher-paying job opportunities or new career paths. - Invest in the stock market or mutual funds
For those with a higher risk tolerance, using home equity to invest in the stock market or mutual funds can yield significant returns over time. A lump sum from a home equity loan, for example, can allow you to take advantage of market opportunities or diversify your investment portfolio. - Fund green energy improvements
Many homeowners are turning to green energy upgrades like solar panels, energy-efficient windows and geothermal heating systems. These improvements not only reduce your energy bills but can also qualify you for tax credits and incentives. - Launch a small business or side hustle
If you’ve always dreamed of being your own boss, home equity can help make it happen. By tapping into your equity, you can bypass the challenges of securing a traditional business loan and focus on building a sustainable source of income. - Invest in rental property
Real estate remains one of the most reliable ways to generate passive income, and with nearly $300,000 in tappable home equity, you may have enough to make a down payment on a rental property. Whether it’s a single-family home, a duplex or a vacation rental, leveraging home equity to invest in real estate can be especially lucrative in 2025.
The bottom line is that your home equity is more than a number – it’s an untapped resource with the potential to transform your financial future. By strategically leveraging this asset, you can pursue ventures and investments that increase your earning potential in 2025 and beyond.
Source: CBS News
