Getting started: Cash Downpayment vs. HELOC

[Tyler Moore]

Hi everyone,

I have been following BP material for the past several months but am new here to the forums. My goal is to excel in the rental property segment utilizing a buy and hold strategy. I have been researching various methods of funding my first property. I believe having a cash downpayment is the ideal scenario, however, this is currently not realistic for me at this time. Therefore, delaying my entry into the game. Would it be too risky to utilize a HELOC to supply the down payment for my first rental property? This would obviously get me into the game sooner, but leveraging my primary residence is an added risk. Looking forward to any and all feedback! Thank you!

[Tom Rolph]

Ultimately you need to be able to sleep at night. That being said, I would not shy away from a HELOC. The main thing to remember is to get a deal! Getting a GREAT price on the purchase will drastically reduce your "Risk" and exposure. You said want to buy and hold. Buy a great deal with STRONG cash flow in a strong rental location and what is your risk? Even if the value of the property dips below your purchase price during a market correction, you are not trying to flip the property. It is a long term hold and it is most important that it is rented and cash flows.