Which option should I use for financing my first deal?

[Erik Salmon]

I am just beginning the process of getting into real estate but I am having a hard time deciding how to fund my first deal. I have built up some equity in my primary residence and have investments to cover a down payment as well. I was wondering how I can put the equity in my house to use. I have been looking at a Refinance or HELOC. The one thing I am wary of is a second mortgage on my home with a heloc. I am open to any other options as well.

[Ben V.]

Hey Erik,

Welcome to BP!

You have several options for funding your first deal since you have equity in your home. I don't know what you are trying to do though...fix and flip, long term, short term...so forth. 

1. Pull a HELOC out and use the funds to purchase a small home with cash. You'll have a paid for home with instant cashflow.

2. Pull a HELOC out and use the funds as down payment for a fix and flip, use the remaining funds to rehab the property.

3. Pull a HELOC out and use the funds to purchase several properties using DSCR loans. That one is a super one and I love the DSCR loan. Get's you going very quickly.

4. You have more options but I think that is the ones I like the most. 

Hope that helps! I'm a mortgage loan officer specializing in first time home buyers and residential investors. 

If you are wondering what a DSCR loan is I wrote a short article on it. Check it out - https://www.biggerpockets.com/...