HELOC on primary home

7 Replies

Hey guys. I started invested in the past ~18 months. I've completed 2 successful flips (30% ROI) and recently bought a great $100k rental unit cash flowing $1,050 a month after all expenses. All of that was done with cash. Now I am looking to begin acquiring 3-5 rentals properties a year. I've met some great private money lenders who can allow me to quickly close deals but I'm also interested in getting a HELOC on my primary residence. Anyone do this recently and if so, any advice? I have about $100k in equity I know I am trying to do a lot and do it quickly but I always make sure to have 50k in reserves and also make a good living in other job so overly concerned with LOC on primary home.

@Jeffrey Ascough - I have done this and love utilizing a HELOC on my primary residence for investing. Below is a link to a blog I posted not long ago on a few ins and outs of this. It also covers what to look for when searching for the right HELOC. A couple of thoughts...

- I would consider moving that equity out of your rental properties and into your primary residence and then doing the HELOC. I would always rather have the equity in my primary vs. in an investment property. If your financial world unexpectedly gets turned upside down, you would rather have the banks foreclose on rentals than on your primary.

- There is A LOT of freedom and flexibility in being able to use a HELOC on your primary to fund your investments, flips, etc.

I think the blog below may be very helpful.  Let me know if you have any questions or want to discuss further. I wish you luck! 

https://www.biggerpockets.com/... 

Depending on the value of your current primary residence...you may not be able to pull out too much of you only have 100k of equity. But it all depends on the total debt once you use the HELOC. It also sounds like you're in an area where 50k can go a long way. I find small local banks and credit unions are the best sources to set up a HELOC. And it'll cost you 1-2k to set up.

Not sure what area you are in but Regions in the SE had a great deal on a HELOC, no fees if you keep it open a year and a great low rate for the first 6 months (if I remember correctly). I opened one up to allow me to buy with cash and pay for the rehab.

Definitely a great tool to have in your toolbox. Just be careful that as the balance gets higher, it will negatively impact your DTI and if you ever move, you will lose that working capital.

I'm in central NJ, along the coast. I intend to refi the rental property that I own outright after the 6 month seasoning period (late April). My plan is to continue to move forward & receive funds from wherever I can get best rate / terms but just figured it would be worth tapping into the equity of my primary for a deal. Primary is worth about 270k & I have 100k in equity in it. HELOC is not something that is going to propel or hinder future investments but figured I should tap into that first before taking on higher interest loans.

@Josh Walker .... read the blog. Thanks for all the great info. I always get caught up on the idea of if I should pay my mortgague down / off or not. My interest rate is 3.5% so I kind of always thought I should just continue with my monthly payment but can see the benefit of paying it down and getting a larger HELOC out of it.

@Jeffrey Ascough you will need to look for a lender who is willing to give a HELOC with the best LTV (loan to value). You may have $100K of equity, but that is on a property worth $270K. If they require 75% LTV, that would only give you $32.5K on the HELOC. If you want the full $100K, you are looking for someone willing to loan up to 100% LTV.