Cash to HELOC to BRRR

Kenosha, WI · Member since 2017 · 93 posts · 21 votes

Is there a downside or something to consider to buying a vacant home (CASH) to owner occupy and immediately get a first position HELOC to use for repairs fix it up over the next 3-6 months then Refi into a cash out 30 year mortgage? I'd then be renting by the room/ getting roommates for the first year then either traditional long term or sell after 2 years.

Can’t recall this being a strat talked about much

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Derek BrickleyBusiness Member
Lender · Ann Arbor, MI · Member since 2021 · 691 posts · 236 votes
9mo
Hey Edgar! I wouldn't say a downside just be sure who you look at for the HELOC doesn't have any property seasoning requirements for title. To do a traditional cash out refinance, you will need twelve full months on title so might push your time frame out a bit more
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Andrew PostellPro Member
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
9mo
@Edgar Perez yes, exactly what the post above stated. Seasoning on a HELOC is the main rub. Using a traditional loan would be significantly easier of a process.
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Edgar Perez
OP
Kenosha, WI · Member since 2017 · 93 posts · 21 votes
9mo
Are we saying seasoning before HELOC or seasoning before CashOut? Or both?
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Andrew PostellPro Member
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
9mo
@Edgar Perez both. This is owner occupied. This is different than investment property stuff. So, you will face 12 months of seasoning in 99% of owner occupied scenarios involving taking cash out of the property. Remember, there are already 5% down or 3.5% down renovation loans on the owner occupied side. Meaning, there are solutions that help us with rehab for less out of pocket. There's not really the big need to take cash out right away since my upfront costs are so low.
Hope that makes sense.
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Sandy Hu
Rental Property Investor · CA|AZ|MI · Member since 2018 · 59 posts · 22 votes
9mo
Quote from @Edgar Perez:

Is there a downside or something to consider to buying a vacant home (CASH) to owner occupy and immediately get a first position HELOC to use for repairs fix it up over the next 3-6 months then Refi into a cash out 30 year mortgage? I'd then be renting by the room/ getting roommates for the first year then either traditional long term or sell after 2 years.

Can’t recall this being a strat talked about much

This strategy actually does get used — it just doesn't always get labeled cleanly as "BRRRR," especially when it involves owner-occupancy + HELOC.

Conceptually, it can work well, but a few things to be very intentional about:

1) HELOC timing & limits
Not all lenders will give you a first-position HELOC immediately after a cash purchase, and some will cap LTV conservatively if the property is vacant or mid-renovation. Make sure you confirm:
- max CLTV,
- seasoning requirements (if any),
- and whether draws are allowed during rehab.
2) Rate & payment risk during rehab
HELOC rates are variable, so you want enough liquidity to absorb higher payments if rehab runs longer than planned.

3) Refi execution matters
When you go to refi into a 30-year loan, lenders will look closely at:
- occupancy history,
- stabilized value vs purchase price,
- and whether the rental income supports the new payment.
  Planning the refi before you buy is key.
4) Exit clarity
Renting by the room can boost cash flow short-term, but make sure the long-term refi lender will underwrite the property the way you intend to hold it.

Done right, this is essentially using a HELOC as bridge capital, then locking in long-term debt once the asset stabilizes — which can be very effective.

Curious — are you planning to refi as owner-occupied or investment once the rehab is done?
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