Updated about 2 years ago on . Most recent reply
HELOC. Variable or Fixed
Looking to get a HELOC on my personal home to invest into my first STR. I'm stuck in picking what the best payment method would be. They are trying to get me into a fixed rate at 7.25% and the variable starts at 9%. My line of thinking is that the rates HAVE to be dropping below 7.25 rather than always being stuck there. Let me know if I'm crazy or not!
Most Popular Reply
Do you have cash to put down and the HELOC for renovations, furnishings, etc. OR are you trying to buy a house with 100% funds from the HELOC? If this is your first STR, do not underestimate the expense and time it takes to get a property to market. It sucks and you'll be bleeding cash for 1-4 months - perhaps longer if you are waiting for your market's busy season to come.
I've worked in commodity, real estate, and transportation markets and have learned 1 thing. The market does not HAVE to do anything or behave rationally. Take the fixed option and underwrite with a 7.25% rate.