Interest Only Loans (Heloc)

[Derek Cheng]

Hi everyone

I am trying to pull a HELOC on my house to expand my rental portfolio (currently 1 triplex). I have been told about this interest only loan option and after reading several articles I am just not sure I really understand the pros and cons and what my risks are. It seems like people who utilize it are hedging on significant appreciation in the property so that at the end of the loan they can refinance and pay the loan back?

also, how would I calculate my cap rate if I take a HELOC out on the downpayment

thanks

[Craig Jeppesen]

Originally posted by @Derek Cheng:

Hi Craig,

It would be for the down payment. The maturation of the loan is 10 years.

 Then I would calculate a monthly pmt based on a 10 year loan for a roi calc. Cap rate is calculated as if there is no pmt on the purchase.