Staten Island, NY · Member since 2017 · 115 posts · 16 votes
What's up BP!
What are your thoughts on using a HELOC on 1 of my investment properties to purchase another investment property? I'm not even sure if that's allowed. The new investment property rental income would cover the mortgage and easily cover the HELOC.
@William DeLuca as long as you can pay it back quickly (ie on a flip or Brrrr), if not it is likely best to do a cash out refi on prop #1 to come up with the down payment for prop #2 especially with rates at all time lows. Good luck!
@William DeLuca as long as you can pay it back quickly (ie on a flip or Brrrr), if not it is likely best to do a cash out refi on prop #1 to come up with the down payment for prop #2 especially with rates at all time lows. Good luck!
We use a HELOC on our primary to acquire properties. We take it out, put it back, take it out, put it back, etc. It's a handy money bucket to help with cash purchases. Getting any type of loan on investment properties has become challenging but I guess there's still some lenders doing investment property HELOCs.
Banks usually don't like to see your downpayment coming from a HELOC and would add that towards their DTI ratio, if you at least have savings showing and say you plan on using that for the DP, it helps
Hi @William DeLuca yes you absolutely can. I'm closing this week on a house being purchased with a HELOC. However, I would not recommend pulling a HELOC to serve as your down payment for a house. Reason being that you're 100% fully leveraged on a house and it will seriously eat at cash flow or make you negative.
I recommend using the HELOC as a hard money loan to yourself and implement a BRRRR strategy or something that would allow you to recoup your investment quickly. That way when you take out he HELOC, you're only leveraged for a short time. Then when you're not using the HELOC, you have strong cash flow on the asset.
HELOC's can be a super cool way to acquire property, but like the others have said, just be careful over leveraging. If you can use it to get a better deal, and then refi or sell to get your money back to pay off the loan PLUS profit, then it can be a great idea