Successful HELOC Loan Experiences

[Sean Laney]

Hi BP Community, can you tell me how you have used your HELOC loans successfully to grow your portfolio/cash flow? What was the scenario/payback structure/ and result on cashflow? I would love to hear about your success's.

[Andrew Freed]

@Sean Laney - I am a big advocate for HELOCS, especially when most peoples first lien positions are in the 2's and 3's. When a majority of the debt is on the first lien position, it makes more sense to access the equity through a variable rate or equity loan than a cash out refinance. Your blended rate will still be well below the market interest rate. 

I utilized a HELOC on my 1 bedroom condo in Boston for $195K and bought my next 6 deals. Two househacks, two investment properties and two syndications. When it comes to a HELOC, I utilize it like a hedge fund, borrowing at 3-5% and transitioning it into returns of 8-10%+. It's worked out well as long as you are investing in cash flowing assets that produce well over enough funds to cover the HELOC interest payments. I'm actually going on my 2nd HELOC right now from my first house hack. However at the end of the day, if you are playing with fire, you have to be smart about it. That's why it is incredible important to have strong cash reserves if you are tapping a large portion of the HELOC.