Heloc to fund investment property

Member since 2023 · 1 post · 2 votes

Has anyone had success using a heloc to fund an out of state rental property and been able to scale up to multiple properties using the heloc and refinancing?

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AJ ExnerPro Member
Lender · Springfield, MO · Member since 2023 · 655 posts · 318 votes
7mo
Hey George,
That's actually how I got started in my personal investing journey. The biggest thing that I keep in mind is your cash flow with the HELOC interest rate and how that is being deployed.
The other thing I would keep an eye on is repayment. You are working on a slightly different timeline than someone who is just using cash to invest, so you want to think 3-5 years ahead and if that money gets tied up in a project, how you can keep making those payments and continuing to scale.
Some lenders will also want to see those HELOC funds 'seasoned' in your account for at least 30-60 days before you can 'use' them for your downpayment. Some don't care, so I would make sure you know which group(s) you have before going too far with them.
Good luck! Happy to connect and help if you need it
[email protected]417-427-2612
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Matthew CrivelliBusiness Member
Lender · MA · Member since 2021 · 1k+ posts · 1k+ votes
7mo
If you are using the HELOC for a value add play where you can refinance at the end to pay back the HELOC, it's great. If you are using a HELOC for a down payment on a rental property, not great. Short term use only.
[email protected]413-348-8346
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Caleb Brown
Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
7mo
You can 100% do that. During COVID I helped a ton of clients do it. The main goal is finding value add, BRRR deals or you can flip. Either way you want to find deals you can payoff the HELOC once you refinance or sell. Then you can rinse and repeat with each deal.
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Matthew Bernal
Investor · Austin, TX · Member since 2021 · 497 posts · 127 votes
7mo
Yes, investors definitely use a HELOC to fund out-of-state rentals and then refinance to recycle capital. It can work well if the deals cash flow strong enough to comfortably cover both the rental loan and the HELOC payment.

The key is not over-leveraging. HELOCs are usually variable rate, so if rates rise or a property underperforms, it can squeeze you quickly. Make sure you have solid reserves and you’re not depending purely on appreciation to bail you out.

If the numbers work conservatively and you have a clear refinance exit plan, it’s a viable scaling strategy.
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Joey BanasihanPro Member
Investor · Boise, ID · Member since 2019 · 236 posts · 188 votes
7mo
Hey @George Enos - most definitely, this is what my wife and do primarily for funding our investment properties, and currently helping several clients who purchased investments last year, doing a BRRRR, and will be pulling money out via HELOC to fund the next one. Once rates get better, they will look to refinance but the HELOC is a good intermediary. Happy to chat more!

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