HELOC for 2022/2023 How to start?

Question

I have a $200k HELOC ready to use just incase. Trying to get a better understanding of what I should do. I did some homework and going to list from least to most appealing and want the pro's thoughts.

• 1) Pay for a property in full assuming its less than $150k. I understand theres repairs and other things that might come up so $50k for emergency is what I'm keeping for that. 
• 2) Pay Down Payment on a property. Make sure the numbers work with high Interest Rates ~8%-9%. The first two is kind of the same
• 3) Find a BRRR Property and find a team to help with the rehab. I know this is probably the ideal scenario as i have to find a property hope the ARV is big enough i can get the 75% back to cover my HELOC and to do it again.

I know I have more options but I can't think of it right now.....

Couple notes: I live in California. Kind of hard to invest in my Market. Thinking of Investing in OH or GA.

Goals is just to get cash flow positive. Ideally buy a property pay off HELOC and recycle. Thanks everyone!

Malcomb Stapel · Answer

@Kenny Kuramoto  option number two is what we have been using. You will stretch your capital and grow much quicker using the banks leverage. If you can lock in long term financing at the current rates, and the numbers still work, it will only get better as time and rent increases go by.

If you purchase one outright with all of your cash, you may miss out on other opportunities while your working on the rehab.

Jason Wray · Answer

Go the #2 route if you want to stay liquid and build wealth use the banks money!  Especially now that we are about to experience a property value shock in the next 12-24 months. (In most areas).  Use the down payment wisely if it does not benefit the rate/payment do not put more down.  Recoup the funds after the renovations/ARV and lock in the lower rate for the long term hold.

Rates are a little shockng right now but not for the long term investors.  In the long game they are irrelevant and can be refinance in 2-3 years when the players in the GOV/FED change hands.

Kenny Kuramoto · Answer

Sounds good. Right now the heloc is at 5.49.. thanks for your input!