Using my HELOC to buy two duplexes
HI BP people
I Have to duplexes under contract by the same seller for $420,000. With a rent of $1000. per month per unit. Now I can get a loan and 75% LTV with about a 5% interest rate, 30 yr fixed. After taking out other expenses and reserves will cash flow just under $1000 a month. The question is coming up with $100K for the down payment and closing cost. Should I use my HELOC to do this which at the moment has a 4 1/2% Adjustable Interest Only rate which if I pay interest only payments Will leave me $500 a month in pocket or I can apply all the income from this property to it and pay it off just under 60 months, Basically at the same time the principal on the 30 year is being paid Down by the tenant's which will give me Another $25,000 in equity. I probably won't be receiving any cash flow from this using the strategy. Does anybody have any thoughts?
Reuben