HELOC to Scale for Long Term Rentals

[Tim Kirk]

Is using a HELOC a good way to scale or is it stupid to finance a down payment?

In my mind it makes sense to use a HELOC to fix & flip and/or BRRRR a house, but I can't wrap my mind around using a HELOC to buy a long term rental. I get the perk of using the HELOC to submit essentially a cash offer to the seller, but after acquisition...when you go to long term finance the home, aren't you in turn financing the 20% down payment as well?

[Nicholas L.]

@Tim Kirk

short answer: yes, you will just be losing money every month, because no LTR anywhere will support 100% financing, if a component of it is HELOC money.

people pretend a HELOC is cash because it's usually attached to their primary and not the rental.  but it's not cash.

when I BRRRR i use hard money for the purchase and then refinance into a DSCR loan.

hope this helps