Rookie in the REI world and ready to get my feet wet! What would you do if...

[Thomas Jaskulski]

Hey there BiggerPockets Community. My name is Tommy and I'm new to the REI world but I've had the desire to get into it since I bought my first home - primary residence in 2020 but never had the capital to start. I work a full time 9-5 and have a side business that I do on the weekends. I've got some cash saved up but no where near enough to cut it. Fast forward 4 years later and I had the epiphany that I can use the significant amount of equity in my home. I've been dealing with a local mortgage broker and have been approved for a $100K HELOC against my primary residence.

So lets talk strategy. I would use the HELOC for a down payment on the prospective investment property and then try to secure a conventional loan(right??). What are my options as far as securing that second mortgage and what would you recommend, Conventional, FHA, Hard Money?

Moving on, I've been house hacking for the past year by renting out a room in my house. It's not that sexy I know, but it's helped me learn and understand a lot with respect to having tenants. My ideal strategy would be to BRRRR but I want build my own capital before I start chasing cash flow.

Short term, I'd probably buy the next property and live in it while I'm adding value. Also, my current "room mate" has expressed her interest in renting my primary residence entirely so I think that's a smart option. I'm thinking that I should do a few value add flips to start and then once I have about $100K of my own capitol saved up, start the BRRRR's. 

Seeking any advice I can get from the community. 

So, what would you do if you were in my situation? Am I on the right track or do I need to go back to the drawing board?

[Wale Lawal]

@Thomas Jaskulski

To build a successful property portfolio, use your HELOC as a down payment and focus on cash flow through value-add flips and house hacking. Secure a conventional loan for the remaining balance, and use alternative financing options like FHA loans. Focus on the Buy, Rehab, Rent, Refinance, Repeat (BRRRR) strategy to build capital through flips and value-add properties. Scale your portfolio slowly and explore partnerships or joint ventures if needed.

Good luck!

[Thomas Jaskulski]

Thanks, Wale! Don't you think it would be a better idea to hold off on the BRRRR's until I do a few value add flips to build up capital? Correct me if I'm wrong but the BRRRR strategy seems more geared toward cash flow whereas I feel like I should be focusing on value add and appreciation right now. Thanks so much for the feedback.

[Dina Nicasio]

Hi Thomas! Your approach shows promise. One thing to keep in mind is to make sure you have a clear timeline and budget if you're planning to flip properties, as efficient renovation management is key. Overall, building capital before starting BRRRR is a solid strategy.

[Thomas Jaskulski]

Thanks for the feedback, @Dina Nicasio! I still have a lot to learn but glad I joined this community to reap all the benefits of its resources. I do agree that having a clear timeline and budget is vital and am actively doing my due diligence with researching that subject. Cheers!