Using a HELOC for Down Payment onInvestment Properties

[Forrest Faulconer]

Hello! 

I am getting a HELOC in place worth around 90k. For now, this is my best resource to invest in a rental properties. That being said, I am having trouble analyzing the numbers and best refinancing strategies when it comes to interest rate and seasoning requirements. Ultimately, I want to purchase properties with value-add opportunities so I can refinance after fixing them up and "replenish" my HELOC which will allow me to repeat the process.

Is anyone currently utilizing this strategy, and if so, what has been the best plan for you?

I have a bank here that will do a bank loan at 20% down (from the HELOC), and then finance 100% of the rehab costs. Once the rehab is finished, they will refinance into another bank loan (5-5.5%, 25 yr. amort.) based off of appraised value at 75% LTV. The fees incurred to do this refinance are apparently much lower than a permanent mortgage. Only downside is the interest rate may be higher than a conventional mortgage (I was getting quotes of 3.99%, 30 year, amort. with 25% down).

Any insight is helpful!

Forrest