Home Equity or Line of Credit ..... Starter investor

[Brandon Belanger]

I'm am a starting Real Estate Investor and I am in the planning stages right now.... I'm using the The Property Buying Process as of right now as a guide from the Ultimate Beginners Guide

So I am on step three and cam along a question about financing the deal(s)

What does everyone think about using a line of credit or home equity.

Little bit about me I am 23 married and have a son. Me and my wife do currently own our house here in henderson,NV

So I guess my question is what are the pros and cons of using this kinda format for a first time startup? Is it smart? Is it risky?

Thanks Brandon

[Steve Babiak]

Since it is your home, a HELOC will typically allow up to 90% CLTV.

So you have to first get a good idea of market value of your home. Multiply that by 0.9 to get max total loan. Then subtract remaining loan balance on the first mortgage to see how much of a loan is possible. You might find a lender willing to go to 95% but I wouldn't count on that; more likely that a lender will be more conservative and not even go as high as 90%.