Using a HELOC to fund a deal.
I bought a house for $75,000 in March with a hard money loan. 90% LTC, 100% rehab. All-in my current loan amount is $84,499. The house appraised for $132,000.I'm wrestling with the idea of taking a HELOC out to finance the rehab of the next house. I'd pay closing cost out of pocket, pay for the rehab and use the reimbursement from my lender to repay the HELOC. Then I just have to rent the house out and repeat. Just wondering if anyone has had success with this method or perhaps some missteps.
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#1 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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#1 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
- Lender
- Fort Worth, TX
@Eric Fernandez Hmm, so your current HML is at $85k? Do I have that right? That means, you still have to refinance out of that loan into your permanent loan. So, your loan balance will increase when you do that. Some investment property HELOCs will go to 75% of the ARV...but most are only at 70% ARV. So, if $132k x 70% = $92,400...that's not really enough room for a HELOC. However, if you can just do a cash out refinance when you do your permanent refinance, that will probably be best.
Hope all of that math makes sense but let me know if I'm off on something. Thanks!