What are HEIs

What are Home Equity Investments?

Home Equity Investments (called “HEIs”) are financial instruments that provide investment exposure to U.S. home price appreciation without the burden of ownership or property management. Unlike traditional real estate investments that require active management and dealing with tenants, HEIs offer a streamlined approach to gaining exposure to the U.S. housing market.

HEIs help homeowners to access their home equity. Unlike traditional mortgage products, HEIs operate on an equity-sharing model rather than a debt model. When a homeowner receives an HEI, they get immediate cash in exchange for sharing a portion of their home's value with investors. This arrangement creates no monthly payment obligations for the homeowner while providing investors with preferred equity positions on owner-occupied real estate.

The fundamental structure provides benefits to both parties: homeowners gain liquidity without increasing their debt burden, while investors gain fractional ownership in residential properties with the potential for significant returns. This alignment of interests creates a unique investment vehicle that differs substantially from traditional real estate investment approaches.

HEI securitizations and ratings are common on Wall Street. Here’s a past securitization rating conducted by DBRS Morningstar from 2023.