How savvy real estate investors are using HELOCs to buy rental properties and build wealth

Mark, who prefers not to share his last name, retired early, thanks to his real estate investments.

Courtesy of Mazske Finance Homeowners are using home equity lines of credit, or HELOCs, to buy investment properties.

A HELOC lets a homeowner borrow against the equity in their property.

It works like a credit card, allowing you to borrow money as needed up to a set limit and pay it back.

Mark didn't have a six-figure salary when he started investing in real estate.

The Florida-based former police officer, who prefers not to share his last name for privacy reasons, said he never earned more than $52,000 a year.

Still, he built a 25-unit real-estate portfolio in less than five years and retired from his day job at 50.

One tool that helped him get started was something he already had: equity in his home.

To fund his first investment property, a $100,000 single-family house in Virginia's Shenandoah Valley, Mark opened a home equity line of credit , or HELOC, against his paid-off primary residence.

His home was worth about $200,000 at the time, he told Business Insider.

Rather than borrow close to the maximum amount he believed he could access, he took out a $30,000 line of credit — about 15% of his home's value — to help fund the investment.

Michigan investor Scott Steenbergh also tapped the equity in his primary residence when he and his wife bought their first sober-living rental .

The investment property required a larger down payment than an owner-occupied home, he said, so the couple used a HELOC to help come up with the cash.

"We were able to refinance our primary, get some of the equity out, and put that to work," Steenbergh told BI.