We have about 80K equity in our primary home and 60K in the bank. We would like to start flipping. My thought is to use our cash to buy or use for the deposit and then get a home equity loan for the improvements. Is this a good strategy? Am I putting our primary home at risk?
HELOC is a good way to start. And as you pointed out, it is also a risk.
Therefore you need to do your due diligence when you're buying. You make money when you buy right.
A good way to mitigate some of the risk is to look into JV with experienced/trusted partners. So instead of going all in by yourselves, you go in with a partner. Share the risk, capital but you also split the profits.
I agree with Chris, HELOC is a great way to get started. We have used that for a couple of deals. When we are in between deals we start paying it back and then when you find your next deal, you can draw it down again.
Also, personal line of credit works too, you can get that ahead of time and have it ready for whenever the next deal comes.
I think you are in the right track! Just make sure the property you buy cash flows on its own. This way, you control your risk.
Remember to leverage your capital!
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