Equity is the portion of a property that the investor truly owns, calculated as the current market value minus any outstanding mortgage balances. Equity builds through three mechanisms: the initial down payment, principal reduction as mortgage payments are made, and appreciation as the property value increases. Real estate investors treat equity as a dynamic resource, leveraging it through cash-out refinances, HELOCs, or 1031 exchanges to fund additional acquisitions. The BRRRR strategy is specifically designed to recycle equity by refinancing after renovations increase value, pulling out invested capital to deploy on the next deal.