Another HELOC Question (NFCU)

[Tristan Colborg]

Hey everyone I am new to BP and to overall REI. I have purchased homes in the past, but always just as primary residences. I am ready to get started investing but have a question regarding funding deals. I currently have about $25k in liquid cash assets and about $110k in available equity in my current primary home. I would like to use a HELOC as downpayment and rehab funds on properties between $50-120k, and then maintain my $25k liquid assets as emergency/operating funds for my deals.

I have looked at getting a HELOC from Navy Federal Credit Union as they allow upto a 95% LTV on a variable rate HELOC. The terms are a 20-year draw and a 20-year repayment period, with a minimum of 1% payment on balance used ($100k borrowed + $1k monthly payment). It looks like the APR will be around 6.25%, but still can adjust monthly based off prime rate.

I feel like using the HELOC to purchase, rehab, then refinance is a good way to go but still a little nervous to be using my primary residence as collateral. Would love to get some input from other BP members if they feel that this strategy with these terms are a good way to get started.