To HELOC or not to HELOC, that is the question

Aaron Teitelbaum · 2025-12-03T14:24:50-08:00

Hi Everyone,I'm relatively new to the real estate investing world, and I'd like to get started on my real estate investing journey as soon as possible. I currently own a single family home and can extract ~ 160K in equity via a HELOC. The question is whether I should utilize most of this equity for a downpayment on a MF home (typically 3-family homes are around 450-500K in my area)? I'm concerned about my HELOC exit strategy as the cash flow will likely cover the HELOC interest and maybe a little of the principle, but it seems I would be paying back the HELOC over a long period of time. Should I just be using a HELOC to cover some short term expeneses? Use the HELOC for cheaper duplex homes or SFHs? Use hard money for the BRRRR method? Keep on saving money from my job for the downpayment on MF properties? Any additional investing strategies and advice that you can recommend for someone just starting out? Thank you, much appreciated!-Aaron

Nicholas L.Pro Member

Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes

9mo

@Aaron Teitelbaum

should you use a HELOC for a down payment and then try to pay it back just like a mortgage?

in general, no - i highly doubt the property would support this level of debt service, and i suspect you'd be substantially negative each month.

Use the HELOC for cheaper duplex homes or SFHs?

again, probably not - i just don't see them supporting 100+% leverage. interest rates are too high.

Use hard money for the BRRRR method?

...maybe? are you able to source BRRRR-able deals, and do you have the time to manage one? I just finished a very modest BRRRR - was tough to find the right property, tough to find contractors and handymen, etc. did i mention it was tough?

Keep on saving money from my job for the downpayment on MF properties?

keep on saving money? definitely. down payment on MF properties? maybe - small, medium, large? is that what you're interested in?

2 Reply

Aaron TeitelbaumPro Member
OP
Member since 2025 · 4 posts · 0 votes
9mo
Quote from @Nicholas L.:

@Aaron Teitelbaum
should you use a HELOC for a down payment and then try to pay it back just like a mortgage?
in general, no - i highly doubt the property would support this level of debt service, and i suspect you'd be substantially negative each month.

Use the HELOC for cheaper duplex homes or SFHs?
again, probably not - i just don't see them supporting 100+% leverage. interest rates are too high.
Use hard money for the BRRRR method?
...maybe? are you able to source BRRRR-able deals, and do you have the time to manage one? I just finished a very modest BRRRR - was tough to find the right property, tough to find contractors and handymen, etc. did i mention it was tough?
Keep on saving money from my job for the downpayment on MF properties?
keep on saving money? definitely. down payment on MF properties? maybe - small, medium, large? is that what you're interested in?

0 Reply
Aaron TeitelbaumPro Member
OP
Member since 2025 · 4 posts · 0 votes
9mo
Quote from @Nicholas L.:

@Aaron Teitelbaum
should you use a HELOC for a down payment and then try to pay it back just like a mortgage?
in general, no - i highly doubt the property would support this level of debt service, and i suspect you'd be substantially negative each month.

Use the HELOC for cheaper duplex homes or SFHs?
again, probably not - i just don't see them supporting 100+% leverage. interest rates are too high.
Use hard money for the BRRRR method?
...maybe? are you able to source BRRRR-able deals, and do you have the time to manage one? I just finished a very modest BRRRR - was tough to find the right property, tough to find contractors and handymen, etc. did i mention it was tough?
Keep on saving money from my job for the downpayment on MF properties?
keep on saving money? definitely. down payment on MF properties? maybe - small, medium, large? is that what you're interested in?

Thank you for the information! I'm interested in small (duplex) and medium (triplex and 4-plex) MF properties. The only capital I have is from a potential HELCO and about 10K in savings. Looks like the strategy should be to keep on saving for the downpayment?
0 Reply

Dustin Smalley

Member since 2025 · 16 posts · 6 votes

9mo

A HELOC can work for short-term expenses or smaller deals, but relying on it long-term can be risky. Using it on a duplex or SFH to get your feet wet is usually safer.

Hard money is an option for BRRRR, just make sure you have a plan to refinance. And saving a bit more for a down payment gives you more flexibility and less stress.

Run your numbers, plan your exit, and you’ll be set!

1 Reply

Ashish AcharyaBusiness Member

CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes

9mo

@Aaron Teitelbaum,

Using a HELOC to get into your first MF can work, but the tax side matters more than people realize. HELOC interest used to acquire or improve a rental is fully deductible against your rental income, so even if the cash flow only covers interest, you're at least getting the tax benefit while building equity in a stronger asset. If you use the HELOC for general expenses or personal use, that interest won't be deductible, so keeping it tied directly to the property you're buying is key. A BRRRR is also an option, but just be aware the tax benefit really shows up once the property is placed in service and depreciation kicks in. No wrong path, just make sure whatever strategy you choose gives you deductible HELOC interest and steady depreciation so the tax savings help cover the holding costs while you scale.

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To HELOC or not to HELOC, that is the question

To HELOC or not to HELOC, that is the question

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