I am hoping to begin my real estate investing career in the very near future. I have a 60k Home Equity Line of Credit available at 2.25% (prime-1%). I found a property that is a steal of a price that doesn't need any major repair, just total cosmetics (flooring, paint, etc). It is a SFH listed at 59,000. After updating (15,000), I have run comps (I am an agent) and have figured the house to be able to sell at 100-110 k. I would like to purchase and rent the property for $1,000/ month, which is right on par with all comparable properties.
I have thought about utilizing my line of credit and making a cash offer hoping to be able to get the property for 40-45k, as it is a very motivated seller. After doing more research on the matter, would this be the wrong path to go down, and just obtain a mortgage with 20% down?
I am looking to utilize the line of credit in the smartest fashion, to be able to grow my investing career as quickly as possible. Does this deal seem like one that could profit enough to make it worthwhile? I would really appreciate everybody's advice and feedback. This site seems like a great tool with a great community.
Sounds like you're literraly betting the house on this deal. I would see if you could go for a conventional loan and try to make a down payment of 25%. I don't feel comfotable with you maxing our your credit, and if the deal goes south, you could lose two homes.
I agree with @Jordan Thibodeau Especially since a HELOC will go up when the interest rates rise.
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