Hey guys, we are in the middle of our first BRRRR project which has most of our cash tied up for the next 5 months or so. We bought our primary residence 20 months ago and did some improvements so we have equity already in it. We want to get a HELOC to use as temporary funds for BRRRR projects until cash out time. For the current project it will help cover some of the rehab.
Debating getting an 80% vs 90% LTV HELOC . The extra 10% LTV will give us another $40k or so available in the HELOC
Factors I am considering:
- With the 80% LTV I got a prime - 1% rate and the 90% LTV will be Prime+1%.
- Some lenders use the maximum HELOC payment (assume the HELOC is maxed out) when calculating DTI so could hurt future loans possibly? **this is my main concern
- Additional risk by taking out 90% LTV against our primary residence. I like the idea of having access to the extra cash at a lower rate than I could find elsewhere. Don't plan to max out the HELOC but it could be tempting to do a bigger deal with the extra funds available. What is the REAL risk here?
Any input you guys have is appreciated!
Hi Brian, just wondering how your first BRRRR went and what LTV HELOC you ended up using. I'm considering doing the same in using a HELOC with my primary residence to fund new acquisitions through BRRRR.