Updated over 3 years ago on . Most recent reply
HELOC to purchase investment property
Aloha all!! Last year my wife and I did a cash out refi on our primary residence, and removed my name from title, which gave us 400k. I used that 400k on a downpayment for me as a primary residence on a 863k home which I will be renting out after the seasoning period (both homes will be placed in a trust). I recently took out a HELOC on my primary residence for 400k and used 100k for PML at 12% interest, and payed taxes. I have about 250k to use on an investment property which is listed for 175k, a townhome on the westside of Oahu. This townhome will cash flow about $700 after paying interest on my HELOC for the 175k. The reason I'm thinking of using my HELOC to fund the entire purchase is that I can make a cash offer and close on this deal quicker but also make my offer more attractive - its pretty competitive here in Hawaii. My question is should I use my HELOC to fund the whole investment property or do a DSCR loan and put down 20 to 25%? The problem with that would be time consuming. I will later do either a cash out refi or a new HELOC to pay off the original HELOC. Any feedback, ideas and suggestions would be much appreciated as I'm new to this game.
Mahalo,
Shane