Looking to use my paid off home to fund my first deal

[Justin Kocian]

My primary residence is totally paid off, and worth around $160,000. I've done some research on HELOC and HEL, and am trying to figure out what the best course of action would be to get the funds to either purchase a property in full or put a down payment on one or two SFRs to use as buy and hold properties.

If I'm understanding this correctly, I could pull out a percentage of the value of the home and use that as a low interest loan with the HEL, and with the HELOC, I would use the value of the home as a credit card basically? I'd only need about $50k - $80k at most. Is there something I'm missing or maybe another option I'm not aware of?

[Derek Diamond]

Hey Justin! That is correct! HELOCs can be interest only and that would allow for a low payment. Be careful because you will not be paying down any interest. If the market turns you will be highly leveraged and now you will be risking your primary residence. But if you have run the numbers and they look good why not go for it. You will be using the power of leverage. I have used this strategy, with success. I buy a place with a HELOC then focus on paying off the HELOC. Rinse and repeat. Good luck!