Using HELOC as the down payment for multiplex

5 Replies

I have about 150K in my HELOC and planing on using as my down payment for multiplex. My Concern is I may not be able to pay mortgage and HELOC from cash flow which is going to be very low due to price of houses in my market. I really appreciate very experienced community can help me to understand the best way to invest for my multiplex.



Always have to make sure the numbers work.

You will just have to account for 2 loan payments. HELOC and commercial mortgage.

The nice thing on the HELOC is it will be an interest only loan. But, make sure you add a little for principle pay down too. If your minimum payment is $1200, budget for $1500. Then if you're short, just pay $1200 .

As long as the numbers work you are good. As you get the HELOC paid off, they'll get even better.

good luck

If the numbers do not work out, purchase one or two smaller properties with the HELOC. Let the cash flow pay it down over time. The smaller properties can be refinanced at some point or simply held free and clear for cash flow.

I know this is an entirely different strategy then what you are proposing. I am simply just saying if the numbers don't work on this one, find a way to use that HELOC. You got this! Best of luck.

Thanks, every one. I have 2 options here. I can use 150K for down payment on three units or buy one unit using total amount and refinance. If I go with option 1, I am going to have 3 different mortgage payments + HELOC payments for each unit. If I go with my second option, i am going to need another about 50K on top of full heloc amount to buy a property based on Colorado market. If I refinance under second option, I can pay my heloc back and move into the second property. Can some one explain to me if the second option is a practical one? I really do not want to get stuck after buying few properties and leaning toards the second option. Thanks for the help!

@Thushara Gunasinghe do you even know if your lender will allow this?

Using a HELOC as a down payment can only work if you have a super low DTI currently. What you're proposing is to be 100% leveraged on an investment property after a decade run of appreciation. I wonder what could go wrong. I would strongly advise against even considering this. HELOC's are meant to be utilized and then paid back ASAP via refinancing or selling.

As for the second option, I think it's a great strategy to use a HELOC to purchase an investment property as cash, at a discount of course, and then refinance into a mortgage that pays off the HELOC.  But you better make sure that you have the refi lined up before you put any motion into the purchase.

I respect that you are looking for ways to utilize debt to grab more properties.  I had the same mindset a few months back.  But your risk goes through the roof with this strategy and it's hard to gauge the actual risk when you're buying these deals.  What you don't realize is you're one or two small black swans away from losing everything.  Yes, everything.