How to best use my HELOC

[Eric Cucullu]

First of all sorry about how long this is.

So here's my situation. I was able to buy my house as a fixer-upper. Got everything fixed up and made it good. After the house was re-done it appraised 147k on a 62.5k loan. I was in able to turn around and get a HELOC with a 61k limit.

Obviously I was very happy with that. So my strategy was to find another place to fix up to make a rental. my goal was to get a Construction type loan that would let me get my hands on another place. Then I was going to use my HELOC to rehab it. Then I would get a conventional loan To pay the other loans back. Then was going to to a HELIC on house number two and keep going with a Domino effect.

Well now for the issue....so even though I have not touched my HELOC credit score is very good and no history of missed payments, Unfortunately the bank says I do not have enough income to be able to do a construction loan. Because of this I'm kind of stuck.

My question is what would you do if you were me? As of right Now I’m partnering with a buddy of mine and might be able to help him get rentals and the way I help him is by being treated as a hard moneylender to cover the rehab and when he does a cash out refi I would get a bit on that end.

If that works out should I focus on paying my mortgage off quicker to where I can raise my HELOC?

If I do pay off my mortgage completely and have the higher HELOC will that make it to where they still will not let me get a loan?