HELOC to Make Cash Offer
Looking for feedback on my strategy. My thoughts are I can get better deals with a cash offer on or off market. To that end, I can access $280,000 on a HELOC at 6.75%, and have other funds available to make a total cash offer up to $400,000 on property in either CT or Florida (my target areas). I like the flexibility of the HELOC allowing me to quickly close within 7 days if a deal becomes available while incurring no interest while I look. Considering either BRRRR or flip in Connecticut for MFH or SFH and/or long term MFH or SFH rental in Florida.
Hi @Steve Bugnacki,
I hope this reply finds you well and in good health. It sounds like you have a solid strategy in mind for real estate investing. Here are some considerations and advice for your scenario:
- Financing: Using a HELOC to access cash for real estate investing can be a good strategy, as it allows you to quickly close on a deal and take advantage of cash offers. However, it's important to carefully consider the interest rate and your ability to repay the loan. Make sure you have a solid plan for generating income from your real estate investments to cover the interest payments on the HELOC.
- Target areas: It's smart to focus on specific target areas for your real estate investing, such as CT and Florida. This allows you to become familiar with the local market and identify potential deals more easily. Be sure to do your research on each market, including the demand for rental properties, vacancy rates, and local regulations.
- Investment strategies: You mentioned considering both BRRRR (buy, rehab, rent, refinance, repeat) and flipping strategies in Connecticut, as well as long-term rental properties in Florida. It's important to carefully evaluate each strategy and determine which ones are most appropriate for your goals and resources. BRRRR and flipping can be lucrative strategies, but they require more hands-on management and may involve higher risks. Long-term rental properties, on the other hand, can provide more stable cash flow over time.
- Property types: You mentioned considering both single-family and multi-family properties. Each property type has its own pros and cons, so it's important to evaluate which ones are most appropriate for your goals and resources. Multi-family properties can provide more rental income, but may require more maintenance and management. Single-family properties may have lower costs and be easier to manage, but may provide less rental income.
In summary, your strategy of using a HELOC to access cash for real estate investing and focusing on specific target areas is a good approach. It's important to carefully evaluate each investment opportunity and strategy to ensure that it aligns with your goals and resources. Be sure to do your research, consult with professionals, and have a solid plan in place before investing.
Sincerely,
Hamlet
Thank you for your thorough response. Working on 1st deal. Involves probate and foreclosure so it's a conplex and long process but looking positive.
Quote from @Erik Estrada:
Quote from @Steve Bugnacki:
Looking for feedback on my strategy. My thoughts are I can get better deals with a cash offer on or off market. To that end, I can access $280,000 on a HELOC at 6.75%, and have other funds available to make a total cash offer up to $400,000 on property in either CT or Florida (my target areas). I like the flexibility of the HELOC allowing me to quickly close within 7 days if a deal becomes available while incurring no interest while I look. Considering either BRRRR or flip in Connecticut for MFH or SFH and/or long term MFH or SFH rental in Florida.
What is the exit strategy?
Hard Money loans can also close in 7 days with no appraisal and no prepayment penalty at a fixed interest rate. How long is the interest rate fixed on your HELOC?
Combining both hard money and a HELOC could work. You can use the remainder of the line to pay for any holding costs or repairs needed.
Erik, any tips on finding and evaluating hard money loans?
It is a solid plan that is used by many investors. You will need to ensure that you are able to cashflow because the 6.5% will eat into that pretty quickly. After 6 months you could POTENTIALLY refi out to pay off the HELOC. The problem will be the interest rates on an investment property and cashflow of the investment.
