HELOC on Primary Residence

[Zach Grigg]

My wife and I have set a goal to obtain our first rental property in 2022 (focusing on small multi-family or potential short-term rentals). We are working through our strategies, or 'war plan' as we call it, and I'm wanting to get feedback from the BP community on opening a line of credit on a primary residence to fund a potential deal, if necessary in securing the property. I'm curious to hear your thoughts and any experience you have using this strategy. I'm looking at this from a risk analysis standpoint to determine if the rewards outweigh the risk - which all depends on the property and what the analysis tell us. All feedback is a great learning opportunity, so let me know your thoughts!

Full Story: We plan to use our current primary residence as a LTR when we go to move in the future (3-5 years). We have a separate savings account specifically for investing, however, our house currently has approximately $45k in equity thanks to the growing market in our area over the last 5 years. We would like to use 2-3 strategies for funding our first deal, which is why we are exploring the idea of a HELOC. Our market focus is located in the Central TN area (Greater Nashville area) and Northern AL area. Each market presents different opportunities (multi-family vs STR), and different challenges.

[Nicole Heasley Beitenman]

The risks aren't that different from mortgaging the property. Using a HELOC on a primary is rightfully a popular strategy. Make sure the numbers work and you'll be fine!