Please advise. Heloc to purchase duplex?

[Marsha Auguste]

Hear me out. 🙂

Im 45 years old, not married with 3 adult children who live with me. My daughter's fiance lives with us too. I receive rent from the kids. This is the breakdown of everything:

Salary 170k/yearly

Home balance ~88k

Home value 492k

Home equity=~403k

4.3% interest rate

Mortgage ~1500/mo

Rent received from kids $1200/mo.

Credit score: ~635 and climbing.

My debt is 21k. I've already done the work on correcting my bad habits and have been reducing my debt drastically. It was way more than that for various reasons but im back on track. I don't have savings yet since I've been paying off debt.

Too many people in the house. Im in the basement of my home. I NEED OUT!

I want to leave the house and have the kids rent it from me. I want to get a 2nd home for me.

Since I don't have a down payment right now, im considering using a heloc for. Maybe 50k of it. 20k to use for some essential updates to my current home and 30k for a down payment on a new one.

I would love to buy a twin home or side by side duplex, where I live on one side and have a tenant on the other side. Im hoping to stay in the same area.  A duplex is expensive on the southshore of massachusetts. 

Is this advisable? I know helocs are risky but with taking such a small amount, that should work right?

Is there something else I should consider doing???

hoping to hear from those who have done it. Thank you for your time.  

[Daniel McDonald]

I did essentially the same thing in the Northshore a few years ago. Used a heloc from my first duplex to buy the second. I used 60k for renos and a partial down payment. It's definitely doable, just more of a personal decision. What's your heloc rate? I agree, I wouldn't go much higher, but some people do. It's going to be more about how comfortable you are with debt. I go back and forth. Some days I am like I never want to use a heloc again and other days I'm like lets put it to work.