Should I use HELOC to purchase short term ocean front rental

Question

Should I take a HELOC on my primary residence that I purchased in 2021 to use for down payment on a oceanfront condo in Myrtle Beach SC for a short term rental?

Myrtle Mike Thompson · Answer

@Brad Evans I recommend establishing a HELOC regardless of whether you end up using it for your purchase or not. They're a fantastic tool. I just opened one on my new primary residence with a local bank here in Myrtle Beach and the line of credit is good for 10 years, then they generally just renew it upon your request. Provides a great deal of flexibility. I've used a HELOC for down payment funds and so have several of my clients.

Benjamin Aaker · Answer

It would be nice to have more information on the purchase and HELOC first.

Generally, you can use the HELOC if

1. you don't have cash for a down payment

2. the new property's cash flow can pay back the HELOC payments as well as its own mortgage

3. you don't mind tying up another property (in this case your primary) and putting it at risk if the investment fails.

If those are true, then go for it.

Corby Goade · Answer

Absolutely! I've done that many times, HELOCs are the best source of deal funding there is.

Philip Barr · Answer

Good stuff, Brad. I hope everything goes well with the deal.

I agree with some of what has been said here, it really depends on weighing the income potential of the property versus encumbering your home to make this happen.Many investors do it, but it is a matter of sitting down and really weighing the pros and cons of the investment and doing research.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.

Dena Beck · Answer

We purchased our first in Myrtle with a HELOC down payment and owner financing. We ended up doing a slightly larger down payment and he came down on the rate. Saved me about 4 points over getting a loan. We put down 30% vs the traditional 25%.

Brad Evans · Answer

Thanks for the information! I am trying to go with owner financing on the condo so I can work out a deal and do less of a down payment. I do not want to take all the equity out of my primary residence for this. The condos in Myrtle Beach that I am looking at have 30-40K per year for rental income. I still have to work out some details. This would be my first time investing into real estate other than my primary residence.

Should I use HELOC to purchase short term ocean front rental

Should I use HELOC to purchase short term ocean front rental

Most Popular Reply

7 Replies