Advice For Rentals After My First Flip

[Chadwick Saxon]

Hey Everyone,

This is my first time posting on BiggerPockets but I have heard good things. I have been doing a lot of research but have not been able to find the answers I need.

I recently got done with my first flip. I was very lucky because I did not really know what I was getting myself into.

I bought the house for $150k and it appraised for $200k before I did any work. I should have just sold it then because after putting $35k into renovations, it only sold for $230k.

After its all said and done, I took home $40k.

Here is what I am having trouble deciding: whether to flip another one or start buying rental properties.

I am 25 years old and even though planning for the long-term is probably smarter, I want to grow quickly.

I have read countless articles on how to acquire rental properties quickly and they all contradict one another.

However, the one strategy I keep reading about is the HELOC strategy. From what I make of it, I can open up a line of credit on the equity of my primary residence.

Let's say I bought my house for $50k and it appraised at $100k (I know this is unlikely but makes the math easier). I could then use 80% LTV of the $50k equity ($45k) to use for a down payment on a rental property.

The problem I see is, since I have to put down 20% on investment properties, that $45k would only get a few properties, if that, before it ran out.

Has anyone had any success with this strategy? What are some other strategies to acquire rental properties fast?

I am at a standstill until I figure out the route I want to go.

Thanks in advance to any replies.

[James Masotti]

Originally posted by @Chadwick Saxon:

@James Masotti Thanks for your reply. You were spot on that's exactly what I was looking for.

Have you ever tried or had any success with this method?

Yes...it's a common method at least by investors here on BiggerPockets. Use the search bar at the top for BRRRR there are a lot of blog article on the topic for how to make this work. A great many more forum posts about people looking for guidance on the specific mechanics. Then also check out @Brandon Hall's blog article about BARRRR for tax optimization.