(By Dianna Vonderheide, Templeton Local + Real Estate Advisor)
Introduction: A Common Dilemma in SLO County
If you’ve owned your home in San Luis Obispo County for more than a few years, there’s a good chance you’re sitting on substantial equity. Maybe you bought in Templeton before prices skyrocketed, or you purchased in Paso Robles when it was still considered an “up-and-coming” wine region. Fast forward, and now you’re looking at six figures in equity — but what should you do with it?
Equity isn’t just a number on paper. It’s leverage, security, and potential. But homeowners often face a crossroad: should you tap it, protect it, reinvest it, or simply let it grow? Below are five practical, real estate–focused strategies for putting that equity to work — including doing absolutely nothing.
1. Do Nothing (Let Equity Keep Growing)
Sometimes the smartest move is to leave things alone.
Why it works: Real estate in SLO County has historically shown strong long-term appreciation. If your home fits your lifestyle and you don’t need liquidity, equity growth can quietly build your wealth.
When to choose this: You’re happy in your home, plan to stay for years, and don’t need immediate cash.
Watch out for: Market cycles. Property values can fluctuate, so it’s wise to review your home’s value yearly.
Pro tip: Even if you’re “doing nothing,” ask your agent for an annual market report. It’s like checking your investment portfolio — only this one you live in.
2. Borrow Against It (HELOC or Cash-Out Refinance)
If you’re not ready to sell, borrowing against equity is a way to unlock funds while staying put.
HELOC (Home Equity Line of Credit): Works like a credit card tied to your home. Use it for improvements, then pay down as you go.
Cash-Out Refinance: Replaces your existing loan with a larger one, handing you the difference in cash. Best if current mortgage rates align with your goals.
When it works: For remodels, debt consolidation, investing in another home, or major expenses where interest rates are lower than other financing options.
Caution: Payments increase, and your home is collateral. Only borrow for projects that add long-term value (like kitchen upgrades or an ADU, not a vacation splurge).
3. Sell & Reinvest in Real Estate
For homeowners ready to take advantage of today’s high prices, selling can unlock the biggest opportunities. Here are three powerful ways to reinvest equity:
Triple-Net (NNN) Investments: A favorite among hands-off investors. With NNN, tenants cover property taxes, insurance, and maintenance, leaving you with passive monthly income. Think: drugstores, fast food franchises, or medical offices with long-term leases.
Traditional Rental Properties: Buy single-family or multi-family units. These offer steady appreciation plus monthly cash flow. Paso Robles and Atascadero rentals remain in high demand.
Short-Term Rentals (STRs): Platforms like Airbnb and VRBO make this attractive. SLO County’s wine country, coastal towns, and festival weekends keep occupancy rates strong. STRs typically earn more per night but require active management (or a property manager).
Best for: Homeowners wanting to convert their “paper equity” into real, income-producing assets.
Pro tip: Always run numbers with conservative assumptions. Vacancy, maintenance, and management all eat into returns — but done right, this strategy can turn equity into a long-term wealth engine.
4. Protect It: Put Your Property in a Trust
Equity isn’t just for you — it’s often part of your legacy.
Why it matters: Without a trust, your heirs may face probate, legal fees, and delays. A properly structured trust ensures your property passes smoothly.
Types:
Revocable Living Trust: Flexible, lets you maintain control while alive.
Irrevocable Trust: More rigid but can shield assets from certain taxes or creditors.
Best for: Families with significant equity who want to avoid probate and protect their heirs.
Pro tip: Pair a trust with a will for full estate planning coverage. Reach out to a Trust Professional.
5. Understand the Tax Angle (and Timing!)
One of the biggest mistakes homeowners make is underestimating taxes when cashing out. Here’s what to know:
Primary Residence Exclusion:
Single homeowners: Up to $250,000 profit tax-free.
Married couples: Up to $500,000 profit tax-free.
Rule: You must have lived in the home 2 of the last 5 years.
The Timing Play (Sell Before Taxes Hit): Sometimes the difference between paying tax and not paying tax is simply when you sell. For example:
If you moved out two years ago and rented the property, your exclusion clock is ticking. Sell before the five-year window closes, and your gain may still qualify.
Waiting too long could expose your entire profit to capital gains tax.
Pro tip: Work with your CPA before listing your home. A well-timed sale can save you thousands — sometimes hundreds of thousands — in taxes.
Closing Thoughts
Your home equity is more than just a number — it’s a springboard to financial freedom. Whether you choose to let it grow, borrow strategically, sell and reinvest, or protect it through estate planning, the key is aligning your decision with your lifestyle and long-term vision.
And remember, timing matters. From qualifying for tax-free proceeds to seizing the right investment opportunities, your strategy today will shape your financial tomorrow.
📩 Reply for a personalized home equity review — I’ll show you exactly how much you’d net if you sold, and we’ll explore smart ways to put that equity to work for your future.
Dianna Vonderheide
dmvonderheide@gmail.com
Your San Luis Obispo County Real Estate Expert
Lic. #01475327
