Updated over 2 years ago on . Most recent reply
Advice on purchasing an investment property with a HELOC
Hello fellow Pockets!
I am in a situation and need some advice.
Situation:
Property is for sale at $175000.00 and could appraise for over $225000.00 once it's remodeled. Or it can be rented out in the state its in with a cash flow of $200-$300.00 a month. This will be my first rental property, so capital is non-existent. However, I do have my HELOC on my current home to leverage a 20% down payment. If I take the HELOC out I'd have to pay it off myself if I wanted it paid off in a decent amount of time. This seems counterproductive because it would be costing me money to pay the HELOC off. Since I dont have any capital, this seems like the only way to get into the business. Is this a bad strategy?
Most Popular Reply
@Nathaniel Tant It's only a bad strategy if you can't handle the payments, on top of personal living expenses, while collecting ZERO rent. Can you handle that amount (do you have savings) for 3-6 months in your current situation?
HELOC's are discussed heavily in the forums. It's an investing tool. You can't build houses with one tool; you need many tools to get it finished. You can't leverage a HELOC forever. The costs are high (especially now) and it slows wealth building (equity) in properties you already own.
"with a cash flow of $200-$300" - Does the cash-flow cover the HELOC payment? If the answer is no I'm not going this route. I'm finding money somewhere else.