All Forum Posts by: Jordan Stallard

@Edward B. thank you for such a quick reply!

Just to clarify. You are advocating for using the HELOC in smaller amounts so that it can be paid back quickly over and over again correct?

I know that BRRRR definitely makes the most sense for using a HELOC. However, I am really more interested in investing in long-term rental properties for the cash flow and appreciation over time. Since I am looking at more of a buy and hold type of deal, is the HELOC even really a good fit for my current situation? I worry that without more liquid money, I would only be able to afford very inexpensive properties that will most likely not produce the cash flow needed or are in areas that do not see much appreciation.

Maybe I should just considering having the HELOC locked in for now as an initial win and continue to save more liquid money so that I can piggy-back my cash down payment with the HELOC at a later date. This way, I can try to find properties that are a little more upfront, but will produce better numbers in terms of appreciation over time and cash flow. Any thoughts?

Thanks again!

Thank you for the quick reply!

Hi everyone!

I am new to the BP community but was hoping someone could try to walk me through a couple of things in regards to a HELOC.

I recently was approved for 40k on a HELOC for my primary residence. I was wanting to use this money as a down payment on a purchase and hold property with the intention to rent it out.

Here's the question: Once I use that HELOC as a down-payment, what would be the ideal way of paying back the HELOC? I have seen people recommend only using what you can afford to pay back in a year in case of a 2008 mishap again. Others simply put their cash flow from the rental into the HELOC loan to pay it off slowly with nothing out of pocket.

Is it better to just use a small amount of the HELOC and pay it back as quick as possible? In this case, I would be sacrificing most of the cash flow from the property plus some of my own income to pay off the loan as fast as possible. To me it seems like dragging out the HELOC over time and letting the tenant cover the cost would allow me to save more liquid money for the next purchase, but the risk of a recession makes me wonder if this is worth doing?

In my situation, I don't have enough liquid money for a down payment. I could also just continue to save more money and not use the HELOC at all to purchase a property down the road. However, this feels like I'm wasting time and not utilizing my equity correctly. I would be putting myself back a minimum 6 months to get started investing if I go this route.

I am aware of the BRRR strategy but this is not something I am interested in. I simply am hoping for some insight into either using less of the HELOC to pay it off quickly, use more of it and let the tenant cover the costs of the loan, or just steer clear of it altogether since I am looking at buying and holding the property!

Thank you all so much in advance for any help you can give this newbie!