HELOC impact on rental Calculations

[Eric Schrader]

Hi all

I have been getting some great feed back from this community.  THANK YOU...

If i use a HELOC for a down payment for a rental property, how do I account for that carrying cost in the overall financial analysis of the deal?

Thanks Again...

[Rob Beland]

I would try and simulate an amortizing loan based on how much $ you are using from the HELOC. If you are using $10K, structure it so that you amortize that over say 10 years or 15 years (fewer years if its feasible). Add that monthly payment to your annual debt service for your first mortgage. If you can't amortize the HELOC as a typical loan and you still have acceptable cash flow than you can't afford to use the money. Good luck @Eric Schrader