HELOC to fund Down Payment
Hi Everyone,
After diving into real estate about 6 months ago, I've successfully added 3 properties to my portfolio. Each property is successfully cash flowing and has a 1-year lease in place. There is no major deferred maintenance, but I do keep a separate reserve fund of $5K to account for any vacancy or maintenance. My monthly cash flow between the three properties is just north of $1,300 with a debt coverage ratio of 2.8x.
My question is, with my current income from my day job and cash flow from the properties, it will likely take me another six months to save up the $20 - 25K needed to acquire my next property. I was doing some research and wondering if it's possible to take out a HELOC or revolving line of credit to secure a traditional Freddy / Fannie loan? I'm very confident I can continue to find properties of similar performance and the cash flow from the acquired properties would easily cover the additional loan. $20K at 4% translates roughly to ~$58 per month.
Very interested to hear if other's have done this before and have specific insight into my target area, Indianapolis.
All the best,
Steve