Good idea to use heloc to put down payment on cash flowing units?

Question

Would it be a good idea to use heloc on personal home to put down payment on cash flowing mix use building? Has 5 rental units plus store front in downtown building. Price makes sense just not sure how to get that money back out or freed up to use for another investment or next home down payment.

Jake S. · Answer

Hey Curt!That is definitely doable. I do that all the time.Is there anyway you can go in within the first year, add value, and refinance to pull out your HELOC?If not, use the surplus cash flow to pay down the HELOC as you go.

Oleg Shalumov · Answer

@Curt Lawrence it is a good idea and done by many. The only disadvantage would be if the market suddenly goes down, and bank call the balance on HELOC. Again the chances of that is very minimal, but just be aware of it.

Bryan Mitchell · Answer

Thanks Jake, I’ll look into this.

Jake S. · Answer

@Bryan Mitchell I may be wrong, but I believe if the LOC is being used for business purposes, you can indeed write it off

Bryan Mitchell · Answer

That’s a good idea. I like HELOC but if you do this and the multi family you are buying is in a LLC, could this be a problem? Would this be considered owners equity? I’m sure you can’t write of interest payments on a personal loan you use to finance your LLC or am I missing something?

Good idea to use heloc to put down payment on cash flowing units?

Good idea to use heloc to put down payment on cash flowing units?

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