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Institutional investors often have unique opportunities not available to most people, including the $36 trillion home equity market. In 2024 alone, $1.1 billion in home equity agreement (HEA)-backed securitizations received ratings from major agencies like DBRS Morningstar, validating HEAs as a legitimate institutional asset class. This securitization market is expected to grow to over $2.5 billion in 2025.
One company, Homeshares, has found a way to capitalize on this underutilized pool of homeowner wealth, and they’re letting individual accredited investors get in on the action.
U.S. Home Equity Fund I, a first-of-its-kind real estate investment fund managed by Homeshares’ affiliated company, Nada Asset Management (Nada), has built a portfolio of more than $10 million in Home Equity Agreements (HEA), providing institutional-grade access and structure to home equity investing.
Through a diversified pool of HEAs, the fund offers investors exposure to residential real estate appreciation while limiting downside risk through capped exposure and asset-level diversification.
The fund is Homeshares’ latest venture in home equity investing. Since 2022, Nada has delivered realized payoffs on more than 40 home equity investments with a 16% weighted average Internal Rate of Return (IRR).
Investors in the fund can take advantage of:
- National diversification across hundreds of properties
- Enhanced portfolio efficiency through direct sourcing and underwriting of each investment
- Built-in risk protection through structured agreements that can withstand significant market fluctuations
- Target returns of 14-17% net IRR
- Professional management by Nada’s experienced team that has transacted over $100M in gross asset value
Investments can be easily made on Nada’s real estate investment platform, Homeshares. Minimum investment of $25,000.
How Homeshares Works, And How Your Money Is Protected
An HEA is a contractual agreement in which an investor provides a homeowner with a lump sum of cash in exchange for a portion of a home’s future value.
U.S. Home Equity Fund I (HEF) provides the cash to homeowners in exchange for a percentage of the home’s future value. The fund generates a return when an HEA reaches a liquidity event, either by the homeowner selling the home or refinancing their mortgage and paying off the HEA.
Each HEA is typically structured with a 1.85 exchange rate to give investors built-in downside protection while maintaining attractive upside potential. For example, if HEF invests $100,000 in a property, the fund may be entitled to $185,000 of the home’s future value upon exit (subject to annualized caps).
This built-in exchange rate establishes a favorable entry point, creating a cushion against moderate housing declines. Even if the home’s value falls, HEF is still likely to recover their capital or realize a modest return because of the discounted effective purchase price embedded in the 1.85 rate.
Only in significant downturns would losses materialize, and even then, the homeowner’s retained equity absorbs part of the impact.
Additionally, HEA-backed securities aren’t tied to macroeconomic trends like interest rate volatility, refinancing cycles, and lease-up delays. HEA performances are tied directly to the underlying residential property values and homeowner behavior.
And unlike traditional real estate investments, there’s no third-party manager. The homeowner assumes responsibility for maintenance, repairs, taxes, and upkeep, and because it’s their home, they’re often more invested in maintaining and improving the property.
This independence not only reduces portfolio correlation, but also provides yield-seeking investors with a growth opportunity that behaves differently than conventional private equity or real estate exposures, serving as a natural hedge against broader market volatility.
In essence, HEAs allow investors to capture equity-like growth in residential real estate while avoiding many of the market-driven risks that challenge traditional leveraged growth strategies.
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