I closed on my first duplex almost 2 months ago. So far so good.
I used HELOC from my primary residence as down payment for the duplex. I now have $77k balance on the HELOC. My monthly cashflow covers the Heloc payment with no issues.
However, It will take forever, To reload my heloc and use it again for my next deal. Paying 1% each month will take 100+ months (thats without even counting the interest).
How do you reload your Heloc quickly? I saw some people buy their next deal within 1 year after, but I dont see this possible at all.
I have been putting extra payment too but not much at all.
I have also resorted to a new strategies where I utilized the 0% and $0 fee balance transfer from credit card to help pay the heloc. Its a bit pain in the butt, since the offer only last about 15 months. Then I have to find another credit card with similar deal.
I am doing this because I want my whole payment every month hit the principal, not a penny goes to interest.
Any other ideas that I should consider?
I don't have a HELOC but you can either BRRRR the property or do flips to generate cash flow to pay back the down payment you used with the HELOC.
Pretty new to this but...... I paid of my primary house, got a HELOC sent up, but haven't used it yet.....
My understanding is that the HELOC is used primarily as a "buy quick as cash" type purchase, get the deal done, get it rented/rehabbed etc, then get conventional financing to pay off the HELOC..... basically the BRRR strategy...... most people don't advocate to use a HELOC as the down payment on top of a conventional ..... so you need to BRRR or flip to keep reloading the HELOC....otherwise you basically have 2 loans you are paying on and no cash reserve to buy the next property..
That's my understanding..... but other more experience REI people will chime in I'm sure.....
I thought about BRRRR but I want to keep it for now. My goal is that I want to have a few paid off property by the time I retire - 30 years from now.
I guess I will take it slow.
With BRRR you do keep it... you buy, rehab, rent, refinance.... you don't sell it. It's just a strategy to buy with cash, add value and then pull the majority of your cash out via conventional financing..
@Ned Jackson thanks! The tenant in one of the unit has a LOT of stuffs that its impossible to do improvements. They are still on lease with me for another year.
I will keep it in mind. Thanks again