Investor · Winter Park · Member since 2020 · 3 posts · 0 votes
I have a HELOC on my primary residence, and I want to use that line of credit to fund buying and rennovating a distressed property. Has anybody done this sucessfully? What difficulties or unexpected issues did you encounter?
I did. For us the willingness to put our home on the line came down to repayment ability. I would not pull money out of your primary home that you were unable to repay from sources outside of real estate.
If you are going to BRRRR, the plan is for that money to leave your account and just go from house to house to house until you are done growing. If that is the plan then a flexible higher interest rate heloc becomes less effective for tapping equity. I would look instead at just doing a cash out refi and drawing the equity anyways. 30 year fixed repayment on principal is better over the long term than the interest only draw of a HELOC IMO.
Investor · Winter Park · Member since 2020 · 3 posts · 0 votes
6y
Thank you Todd, good advice. In my situation I have a primary/ conventional mortgage and a Second Mortgage (HELOC) originally to finance our primary home. We did this to avoid a jumbo loan and Mortgage insurance. The intention was to pay off HELOC quickly, as the interest is significantly higher. So now I'm looking to refinance into one mortgage, and pay off the HELOC as a primary goal.
Now (assuming primary goal is successful/ makes sense) I'm wondering if I just save up until I have enough to pay cash for a home to BRRRR or if I find a good deal before that do I just go ahead and use that freed up HELOC?