Getting started out

[Tyler Quick]

Hey BiggerPockets team, I’m new to investing and have been digging deep for almost all of 2022 trying to figure out the best way to start out my real estate journey! 
Little background , I purchased my primary residence in November of 2020 for 140k with a FHA loan(intrest rate is 2.75) and have gained some equity since(currently apprasial 180k) I have opened a HELOC and currently have access to 15k from it.
At first the BRRR strategy seemed very interesting especially since I will be primarily using a Heloc to fund it all, and I didn't want to be tied into those funds for very long, but after talking to a few lenders and making a few offers on properties, I was notified that I would not only need the 20% of purchase price but also would need some funds put back for rehab as well.( most say 100% rehab but want you to cover aportion until they see work is completed and they reimburse in portions) so at the moment BRRR seem to be out of the way.

So I have been looking into the STACK method, and plan to move every year and turn previous residence into a rental, since I have now been in my home for the required time(1/2 years FHA requirements). The time has come to where I'm looking at other properties, but I'm wondering how to get into the next one, I've gained enough equity to where I could refinance my current residence (current payment is 950$ ) with rates the way they are if I refinance I would be looking at around a 1250$ payment. And FMR is around 1500$ so I would still cash flow and could get into the next property with a FHA loan (3.5% down) , but I have also been hearing about 5% conventional options? If this is true, should I look into the 5% conventional instead of taking the intrest rate hit and also having to close out the Heloc due to refinancing or should cash out refinace my current residence take the cash to use on the next property instead of using the Heloc and repeat every year assuming that I can get a property for under market value and use the equity every year to purchase the next property? Just needing some outside eyes looking in to see a diffrent perpective, I feel as if I get so stuck and don't know which move would put me in a better position for the next , any help is appreciated !

[Nathan Gesner]

Quote from @Tyler Quick:

Don't bother with a HELOC. That's just another method of borrowing money to borrow money. It will cause you to be over-leveraged and more likely to get in a pinch.

Don't refinance your home. That equity you gained was from an unprecedented market that peaked in June of 2022. It is more likely to go down in the next 1-2 years than it is to reach that peak again.

Don't make the mistake of patting yourself on the back as a great investor. You bought a house and got lucky with the market booming and gaining some equity. We all gained equity. It's why so many people are cashing out equity and buying up property around the country. I recommend you don't spend money you haven't earned.

Do what you did the first time. Hustle, cut expenses, save up, then invest.

You bought your primary in 2020. Save up and buy another primary, then turn your current home into a rental. That gets you in cheap (5% down) and easy. Spend the next year educating yourself, learning how to manage your rental, and saving up for the next one.