Securities Financing for Real Estate: Borrow, Don't Sell
If you're a real estate investor sitting on a stock or crypto portfolio, you've probably run into a frustrating choice. You need capital for your next deal, and the two paths in front of you both come with a real cost.
Sell the stock, and you trigger a taxable event while forfeiting every dollar of future upside on a position you may have held for years. Leave it alone, and your capital sits idle while you scramble to piece together financing from lenders who were never built with this situation in mind.
There's a third path most investors don't know exists: securities financing. It lets you borrow against a stock or crypto position to fund a real estate deal, without selling a share and without a credit check. Here's exactly how it works, what it costs, and where it fits into a smart investor's financing stack.
Why Conventional Lending Doesn't Solve This Problem
Most financing tools built for real estate investors assume one thing: that the investor's creditworthiness is the primary underwriting factor. That works fine when you're buying with a W-2 income and a strong FICO score. It breaks down when your wealth is sitting in a brokerage account instead of a paycheck.
Personal loans require monthly payments and a personal guarantee tied to you individually. Margin lines at a traditional brokerage were never designed to handle restricted or insider stock, and they typically cap out around 50% loan-to-value, well below what securities-based lenders can offer (Schwab, 2024).
The result is a real gap between the capital an investor holds on paper and the capital they can actually deploy into a deal. Standard financing does nothing to close it. That's the gap securities financing was built to fill.
What Is Securities Financing?
Securities financing is a form of asset-based lending where an investor pledges publicly traded stock or select crypto holdings as collateral, and a lender advances cash against the value of that position. It's structurally similar to a securities-backed line of credit (SBLOC), a lending product that FINRA and the SEC have issued investor guidance on, but real estate-focused securities financing is typically structured as a term loan rather than a revolving line, with underwriting built specifically around real estate use cases (FINRA, "Securities-Backed Lines of Credit Explained").
The core mechanics work like this:
* Shares get pledged into custody under a control agreement, typically through institutional custodians such as BNY, JP Morgan, Citibank, State Street, or Fidelity * The lender advances cash against the collateral value of the pledged position * Shares stay in the investor's name throughout the loan term * No sale occurs, so there's no immediate capital gains event * The loan is typically structured as non-recourse, meaning the lender's only remedy in default is the pledged collateral itself, not the borrower's other assets (Kiavi, "Recourse vs. Non-Recourse Loans")
How It Differs From a Standard SBLOC
A traditional SBLOC, the kind offered by major brokerages, is a revolving credit line most often used for bridge financing, tax payments, or general liquidity. According to FINRA and Investor.gov, standard SBLOCs typically allow investors to borrow between 50% and 95% of portfolio value depending on the asset type, with U.S. Treasuries qualifying for the highest advance rates and individual stocks landing lower (Investor.gov Alert on SBLOCs).
Securities financing for real estate investors is a more specialized version of this same concept. Rather than a generic revolving line meant for any personal use, it's underwritten specifically to fund real estate acquisitions and rehab, often with higher loan sizes and terms built around deal timelines rather than open-ended credit access.
The Numbers: LTV, Rates, and Loan Sizes
Terms vary by lender and by the type of security pledged, but here's a realistic range based on current market offerings for real estate-focused securities financing:
* Unrestricted shares: up to 75% loan-to-value * Restricted or insider stock: typically 30% to 50% LTV * Loan size range: $50,000 up to $500 million or more, scaling with the size of the pledged position * Interest rate range: roughly 1.5% to 7% annually, interest only, paid quarterly * Terms: three, five, seven, or ten years, with early repayment often available after two years
For comparison, a standard SBLOC through a major brokerage generally offers around 70% LTV on stocks, mutual funds, and ETFs, and over 90% on cash equivalents and Treasuries, according to Schwab's breakdown of securities-based lending ratios (Schwab, 2024).
Why It Stacks Differently Than Credit-Based Financing Tools
Most financing tools real estate investors rely on, things like debt consolidation, gap funding, credit card stacking, HELOCs, and business lines of credit, are credit-based. They compete for the same lender approvals because they're all evaluated against the same credit profile. Apply for one out of order, and you can knock out your approval odds on the next.
Securities financing sidesteps that entirely. Because underwriting is based on the pledged security rather than the borrower's credit profile, it runs in parallel with a credit-based stack instead of competing within it. There's no FICO requirement, no real property required to qualify, and no business revenue requirement. It doesn't compete for capital inside your existing stack. It expands your total capital capacity.
A Real Deal Example
Here's how this plays out in a real scenario. An investor holds a $600,000 public stock position and is working a fix and flip that needs both a down payment and rehab capital.
Securities financing at 30% LTV against that $600,000 position unlocks $180,000 in cash, without selling a single share. That capital covers the rehab budget while the rest of the investor's stack, including gap funding for the initial acquisition costs, runs in parallel rather than competing for the same lender approval.
This mirrors a broader pattern in real estate investing right now: more investors are structuring deals to avoid multiple refinances, since each refinance carries its own closing costs and appraisal fee. Structuring capital correctly the first time, rather than refinancing twice, keeps more of that capital in the deal instead of in fees.
Who Qualifies for Securities Financing
This tool tends to fit a specific type of investor profile. You're likely a good fit if you are:
* An accredited investor holding a meaningful stock or crypto position. Under SEC rules, that generally means a net worth over $1 million (excluding your primary residence) or an income of at least $200,000 individually ($300,000 jointly) in each of the past two years (SEC, "Accredited Investor Net Worth Standard") * A company insider holding restricted stock who cannot sell on the open market
Additional qualification requirements typically include a minimum daily trading value of $30,000 or more (calculated as share price times 60-day average trading volume) and clear, disclosed ownership of the position.
This is likely not the right tool if you hold illiquid, thinly traded, or non-public securities, if you're unwilling to place shares into custody for the loan term, or if you have no equity position outside real estate. In that case, the traditional credit-based stack (debt consolidation, gap funding, credit cards, HELOCs, and business lines of credit) remains your primary path. Explore how those tools work together in our gap funding toolkit.
Risks to Understand Before You Pledge Shares
Securities financing isn't risk-free, and it's worth understanding the downside before you commit a position to collateral. Regulators have flagged several risks specific to securities-backed lending products generally:
* Collateral calls. If the value of the pledged position drops significantly, the lender can issue a call requiring additional collateral or repayment, sometimes within just a few days (FINRA, "Securities-Backed Lines of Credit Explained") * Forced liquidation. If a collateral call isn't met, the lender can sell pledged securities to cover the shortfall, often without needing the borrower's approval, which can trigger an unplanned taxable event (Investor.gov Alert on SBLOCs) * Market volatility exposure. Because the loan is tied directly to the value of the pledged security, a market downturn can shrink your available credit or trigger a maintenance call at the worst possible time
These are real considerations, which is why securities financing works best for investors with a clear repayment plan and a security they're comfortable holding through market swings, not as a substitute for sound financial planning.
Is securities financing the same thing as an SBLOC?
They're closely related. An SBLOC is typically a revolving credit line offered by a brokerage for general liquidity needs. Securities financing for real estate is usually structured as a term loan built specifically around real estate acquisition and rehab timelines, though both use pledged securities as collateral.
Do I need good credit to qualify for securities financing?
No. Underwriting is based entirely on the pledged security, not your credit profile. There's no FICO requirement, which is why this tool can run alongside a credit-based financing stack without competing for the same approvals.
What happens to my shares if I default?
Because these loans are typically structured as non-recourse, the lender's only remedy is the pledged collateral itself. Your other personal assets aren't at risk, though you would lose the pledged shares in a default scenario.
Can I use crypto instead of stock as collateral?
Select crypto holdings can qualify with some lenders, though eligibility and LTV terms vary more than they do for publicly traded stock.
How fast can I get funded?
Funding timelines for real estate-focused securities financing typically run 5 to 10 business days from application to close, depending on the custodian and the complexity of the pledged position.
Will I still get dividends and voting rights while the loan is outstanding?
Yes, in most structures. Dividends typically go toward reducing the loan balance, and voting rights are generally maintained through proxy for the life of the loan.
The Bottom Line
A stock or crypto position doesn't have to sit on the sidelines while you go find financing elsewhere, and you don't have to sell it to put its value to work. Securities financing turns a portfolio you already hold into usable capital for your next deal, without a sale and without a credit check, often closing in as little as 5 to 10 business days.
Want to see what this looks like with your own numbers? Book a free strategy call to map out your gap funding, paydown, and 0% stack timeline, or explore the full gap funding toolkit to see how securities financing fits alongside the rest of your financing stack.
Want to see what this looks like with your own numbers? Book a free strategy call to map out your gap funding, paydown, and 0% stack timeline.
Related Reading
This article is for educational purposes only and isn't financial, legal, tax, or investment advice. Credit and financing outcomes depend on your own situation. Talk to a licensed financial professional before making funding decisions for your business.