HELOC payments in Rental Calculator

3 Replies

Hi, Using the BP Rental Property Calculator and have a question. I'm planning on getting my downpayment from a HELOC against my primary residence. What's the best place to incorporate this financing into the calculator? Since I'm technically borrowing 100% of the purchase price by taking the down payment from the HELOC (rather than the 75% loan against the subject property) I guess I could indicate 0% downpayment and create some sort of blended rate that represents the new 1st mortgage against the rental property and HELOC payment. This seems a like it opens me up to some errors in return / cap rate and was hoping there was a better way. Anyone know how to do this?

You could just deduct the payment from the cash flow (assuming it's both principal and interest) after you run the report, while reflecting a 25% down payment within the calculator.

Also, while this will impact your cash on cash return, your cap rate will be unaffected as cap rate disregards financing. That's one of the main reasons people like to know cap rate - financing options may be different for different people.

@Ross Flaharty doing a true calculation will be challenging. Your HELOC rate adjusts AND it will "mature" into something else in about 10 years. I'm not sure about the amortization either...could be 15 year, 20 year, or 30 year. I've seen all types. Keep in mind that you do not want to keep this HELOC balance going for a long time. That maturity date will crush your cash flow when it comes.