HELOC Investment Strategies

[Tim Kaminski]

BP,

Have acquired my first property February of 2018.  Recently got a soft appraisal from my realtor and banker who told me they feel comfortable that I can get $50K out of the home to use on a new property.  I'm in Tampa, FL and mainly looking for 2-4 units so $50K doesn't get me anywhere close to my market prices($150-250K).  I know ppl invest with HELOCs and just wanted to understand how, exactly.  I put about 20K of my personal money into the purchase and rehab of property and was hoping to be able to pull out and recycle the money.

Options as I see them.

• Use $50K as a downpayment on property in my area.  That would mean I have loans on 100% of the property.  That sounds risky.  Do ppl do this?  
• Use $50K as "cash" purchase of OOS investment properties in cheaper market.  Refinance property to pull money back out.  Repeat  Again, risky with unknown market.
• Wait for $50K to grow to 100-150K.   Buy all cash and refinance. Risky as market looks like it may go down/level.  Can take years and years to reach this. 

LOTS OF RISK. I want to grow and use the money I have created.  Any ideas?

[Steve Vaughan]

Yes, most leverage 80% to scale.  I put a Heloc on my house this year. Haven't used it, but it wasnt difficult to qualify for and only $375 to establish + I think an annual maintenance fee. Not much harm to have just in case.

Glad you are aware of the risk of borrowing more, but it depends on the deal.  I bought a BRR this year and the returns were more than enough to borrow for.  I would rather borrow for a good deal in my local market than buy a hood house OOS at retail with the money I have.  

20% down on a good deal is much better than 100% down on a bad one.