Should i use a HELOC

Question

at what point does it make sense to use a heloc on an investment property

would you use one to buy the property cash (house is worth $50k) not a lot of room for appreciation, but the rents make sense for me to sit and hold it.

in what situation have you guys used a heloc?

Cory King · Answer

just be cautious when it comes to using these. ensure you've got a plan to pay that balance back in a relatively quick fashion as most HELOC rates can fluctuate which could make the numbers suddenly not work.

i've leveraged mine in instances where i'm doing a BRRR and i want the deposit for a private money loan. i'm not using it as my downpayment and leaving it out there for a long period of time.

Kyle Hendricks · Answer

We offer investment helocs! Like the previous comments it just comes down to if it makes sense or not. I do these quite a bit for investors. They also use automated appraisals so can be as quick as 5 day fundings. Shoot me a message it you have any questions, happy to help!

Kerry Baird · Answer

The rates on investment loan HELOCs are higher than the rates on the primary residence.  I'd rather have a fixed rate on my investment properties vs a variable rate.

I do have a ton of equity in my personal residence, and it would be cheaper to draw from my house equity to buy a fixer house, fix it and refi or fix it and rent, vs getting a hard money loan.  I would use my equity in my house for a short term purpose with a quite sure outcome of paying off the line.

On the other hand, I would use a BLOC in the name of my business for deductible financing, that won't clutter up and impact my personal FICO score.

Jaron Walling · Answer

@Joseph Lombard The HELOC is best described as personal short term financing. It's an expensive bridge to value add, flip RE, or close on a deal all CASH. Savoy investors use them for additional fire power when buying deals. Nobody leverages a HELOC and pays on them for long periods of time.

"Would you use one to buy the property cash (house is worth $50k)" - Absolutely, as long as you know you can qualify/source/secure conventional financing. Preferably you can add value OR buy below market. If you buy a property for $50k and the market value is $50k what's the point?? The risk of pulling equity from _____ is not worth buying that property. That's not a good deal. Command a better price or don't use a HELOC to fund it. Cheers.

Should i use a HELOC

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