How would a market downturn affect BRRRR refinancing?

[Phil T.]

I've been looking for my first BRRRR property for a couple of months, and plan on using a HELOC on my primary residence to finance the purchase and rehab. With all of the uncertainty about the economy recently (specifically the last couple of weeks), it got me thinking of how a market downturn/recession would affect a cash out refinance on a property like this. I feel like it'd be a little more risky for me since I'd be using a HELOC, and not cash for the deal. What are everyone's thoughts?

[Todd Rasmussen]

@Phil T.

We did the same thing. For us, the ability to carry the HELOC debt service without passive income streams (W-2 incomes only) was the biggest determining factor on if we were willing to take that risk.