Using home equity loan to buy foreclosures

3 Replies

Hello, I am interested in investment properties and I found this community through my brother. I currently have about 350 to 400k in equity in my personal residence and would like to use it as leverage to buy a multi family rental property. My goal is to take out a home equity loan and use the funds to buy a foreclosed property. I would then do rehab on the home and rent out the units. My question is would I need to take out a loan first then sit on the cash until I find something or is there another solution? I wanted to see if anyone has experience with this. Thanks in advance! Alan

I would recommend the HELOC first. You are a cash buyer when you find something after that or at least have the down payment if it's something larger. As far as foreclosures, you literally need to have the money in hand if you buy from an auction. Do some reading so you know what's expected for due diligence. J. Scott has an excellent pair of books about flipping houses and estimating repairs that are offered in the BP bookstore. Even if you aren't flipping, the info re rehabbing is really good. Good luck.

100% get a HELOC good for 10 years. No charge until you use it to buy a property, a car, a remodeling job. HELOC 150K is about 5% interest rate. The next is seek a mortgage get preapproval letter now.