Should I sell my current home or get a HELOC

[Michael J Martinez]

Good evening! I’m very interested in starting out in real estate investing. Mainly in rental properties (BRRRR Method). I currently live in south Florida, and own a 3 bedroom house. My question is should I sell my house or take out a HELOC to start out. I have about 130,000 equity in my house, but honestly my credit isn’t very good so I’m not sure a HELOC is a great idea. My reasoning for wanting to sell is build up my credit and start later this year. However I would like to keep my house, and consider a HELOC. I could definitely use some advice on which route to go. Thanks

[Phillip Bicker]

@Michael J Martinez I think your smartest bet would be to talk to a couple banks about a HELOC and about a new mortgage. If you sell your house, would you be purchasing another home - you will be facing the same credit issues with a new purchase as well. Honestly, I think your best bet would be to really focus on your credit for now until you can get it to a level that is sufficient to do a HELOC or a home purchase. Otherwise, you will likely be spending more on rent after your sell your house and may not be able to live in a home/area you want due to only being able to rent.

I think the very best option would be to sell your home and then house hack if you have the willingness and family situation that would allow you to do so. This would either be living in a home that you can rehab as you live there (preferably for 2 years for the home gain exclusion so you never have to pay tax on the gain up to $250k or $500k if filing joint taxes) OR buying a multi-unit property and living in one of the units and renting the other ones (you can get conventional residential financing up to 4 units). 

Good luck!