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Rhyna Orillaneda
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HELOC to buy investment cash. What are possible exit strategy?

Rhyna Orillaneda
Pro Member
Posted Apr 25 2024, 10:13

Hi all. Trying to put my financing ready. I have a primary home that has a lot of equity. Planning to use HELOC to buy cash for a property. What are some of the exit strategies to transition to long term loan?
Appreciate all your feedback.

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Matthew Kwan
  • Lender
  • Bellevue, WA
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Matthew Kwan
  • Lender
  • Bellevue, WA
Replied Apr 25 2024, 10:26

If you do cash out refinance it would allow to only get to 75% LTV around the high 7s with some points, they would still require to be 1st position. As for HELOC allows it be in 2nd position and it allows you to get up to 90% ltv for primary. However, rate would be prime + index + an additional +2% for the shock factor just to qualify, but you can draw the funds whenever you want vs cash out where you have to draw all the money after closing.

Many borrowers would keep opening lines of credit, assuming you have the equity + income to qualify, as you keep rinsing and repeating the heloc process.@Albert Bui @Carlos Valencia

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Jaron Walling
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  • Rental Property Investor
  • Indianapolis, IN
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Jaron Walling
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  • Rental Property Investor
  • Indianapolis, IN
Replied Apr 25 2024, 10:32

"rinsing and repeating the heloc process" - Don't forget paying all the fees and closing costs along the way. 

@Rhyna Orillaneda Whatever you do don't get stuck holding RE with HELOC funds. Make your cash-offers, remodel/value add (ideally), and then cash-out into a fixed rate.

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Rhyna Orillaneda
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Rhyna Orillaneda
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Replied Apr 25 2024, 10:49

@Matthew Kwan - thanks for your reply. I want the HELOC option because the funds are readily available whether I want to use it or not. I am not understanding the EXIT strategy though. Say I bought the house cash thru HELOC, have it rehabbed. Then refinance it to DCSR loan. Would I get the cash back to pay off the HELOC? I wanted to be sure I'm understanding the exit strategy before I decide on using HELOC for my first investment property.

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Rhyna Orillaneda
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Rhyna Orillaneda
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Replied Apr 25 2024, 10:51

@jaron walling - yes. Don’t plan to use it long term. Thats why I wanted to ask a lot of questions about exit strategies. 

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Richard Pastor
  • Investor
  • Portland, Or
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Richard Pastor
  • Investor
  • Portland, Or
Replied May 2 2024, 20:58

what are the interest rates looking on a dcsr loan with 750-800 score?