How to best utilize my HELOC?

[Cody Revel]

Hello all!

I just obtained a HELOC of 118k but have cold feet on where to start. If you were in this situation how would you best utilize this HELOC to begin you investing portfolio? I'll include my thoughts below and please let me know if i'm on the right track..

1. Leverage the HELOC to purchase a home around 60-80k (possible in my market of Salisbury, MD - 2 Hours East of Baltimore for reference)

2. Utilize 10-20k of the HELOC in repairs putting me between 80-100k in total funds used (don't want to max it out incase I'm missing something. I am also quite handy and did a complete reno on my house so I can leverage my time for the first deal but the goal would be to not do it forever of course...

3. Rent it out

4. Cash-out refi (this is where I start to over-think I think.. I believe I would need to ensure that my ARV is higher then my repair cost and purchase price, in the example anything over 100k. That way when i refi I could take the 100k and put it back into the HELOC to pay it off? This scenario would be easy to do of course as long as i'm in the right areas and don't over-pay for the property.

5. Repeat?

Side note: I understand the HELOC is variable so it would be very important to refi ASAP to lock in a rate. My refi is interest only.

That is my most basic understanding of how to leverage my HELOC. I would love to receive any advice or input that you may have.

[Cody Revel]

Joe, thank you for the feedback! The repair costs of 20k-ish would be with me doing most / nearly all of the work. I do however agree, I could never find a property in that price range where I could find a professional to do the repairs around 20k. I figured the first few deals I could do the “heavy lifting” per say and then once I get some more experience hire out to do the work. 

Quote from @Joe Norman:

That sounds about right, as long as you can find a deal where you're all in for $80-100k. I'm not intimately familiar with the Salisbury market (Go Gulls!) but finding a home for $60k that only needs $20k worth of work seems optimistic. Good luck!