Hello and welcome to the Forum Taylor! Even though you have a decent dollar amount it won't matter with most Banks. They might do it at 80% but I would not guarantee it. Your amount may not consider all the closing costs or fees charged. No, its not a good way to start but it is a way if you can convince a bank, especially a local one. It might be easier to get a HELOC loan or a credit card with a special rate for opening a new account but you must be disciplined and pay it down quickly.
Where did you get the current home value? Are they reliable? There are not any pros I can think of. If you find a good deal try a hard money lender. There is always a way you might get owner financing but it might take some creativity to make both sides happy. Like them 2 loans that includes a down payment amount they need. No one knows what the future holds.
Good luck to you!
I would not be comfortable levering 85% of my home's equity. The highest I would go is probably 60% so in your case that would not get you much. Even a LOC, 80k won't be enough to buy an rehab anything decent in most parts of the US. You could use it as a down payment on a HML but then you are leveraging leverage and with no experience that is very risky. Since you have little money I would focus on finding partners who you could work with so you can learn the business a little better before risking you home.
You can think of a HELOC as a credit card with exceptional interest rates. I think the risk of using it comes down to your time horizon (due to the variable nature of the product), and the ROI using the interest you are paying as part of the calculation.
If you are using the HELOC to BRRRR or Flip, I think it is an excellent way to get started because your payback time horizon is relatively short. I wouldn't expect interest rates to raise more than 2% per year and there is probably some sort of max increase clause in your product. Banks' terms will vary.
Additionally, I would "season" the money needed from your HELOC in your checking account for at least 2 months if you want to get a conventional loan and look at it as part of your holding costs.
Hello and welcome,
It depends on your willingness to risk. Can you afford the larger mortgage payment? Are you willing to work for it. If so then get a HELOC and start owning rentals.