Flipper/Rehabber · Cranston, RI · Member since 2018 · 18 posts · 1 vote
Is there a certain time frame to apply for a line of credit on a home that you paid cash for? I am trying to figure out a good strategy. Ideally, I would want to buy a home cash, fix it up if needed and then open a line of credit to get my cash back and have the rents pay for the line like a mortgage. Any info on or recommendations for this strategy please reply!!! Thanks!
@Frank Capaldi, I don't think there is any kind of time restriction. A HELOC taps into equity, so if you buy cash, you have equity. Might suggest waiting until the upgrades are finished so that you get the highest possible appraisal.
Something to consider, why not just get a standard mortgage after closing? You'll get a better rate than a HELOC and therefore, cashflow more.
I'm not saying your approach is right or wrong. It's just good to consider all of the options.
Yeah i would wait until the updates are complete. Are mortgage rates really better than HELOC rates? I just got one on my house and it is 1.9% then goes to Prime after the first year but then i can always refinance it for a better rate. And the reason I think its better to do it that way is because once i get the HELOC i can pay myself back the cash i used to buy the property then i am into the house for 0$ out of pocket