Advice on financing part of a flip with equity loan

4 Replies


I've been thinking about flipping a property but I don't have the 20%+ to put down when financing with a HML. I currently own the home we live in and was thinking about refinancing it and taking out an equity loan to use as the downpayment on a fix and flip. Based on your experience or knowledge, would this be a bad idea? Is there a better/more creative way to get that money to put down?

@Larissa Luna If you can refi and do a HELOC on your primary residence for the purpose of your real estate investment portfolio.....go for it! Just dont use the funds to buy toys or use the house as a piggy bank, its tempting. Be disciplined and put the money back once you get the cash-out-refi for your flip. Most HELOCS are half a point above prime, so its cheap, cheap money. And, you get to write off the interest expense on the HELOC. A win-win. Best of luck to you!

Thanks so much for the advice @Jack Bobeck . Do you think a equity LOAN would work as well? Or do you think a line of credit is the better way to go?

@Larissa Luna The loan is a permanent thing, it is there for the term and is always there. I like the line of credit options. Many banks will do 60-80% LTV, each has a different program. You borrow, use, and then put back when not needed. I like this much better than being on the hook every month for a payment, EVEN if you don't need the cash.

let's hope one day we don't need bank cash and can use our own for our own deals! 

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