HELOC for downpayment - means 100% financing - too expensive?

[Greg R.]

Hi all, 

Wrestling with making sense of HELOC as viable option for financing..

Current strategy would be to buy and hold cash flow + rentals. I have been planning to use HELOC to fund down payment, then mortgage to cover the rest - so in essence financing 100% of the property purchase. 

Q1 -  Would the numbers ever work? Say on a $100k property renting for gross $1000 per month (1% rule) - 20% / $20k down payment using HELOC (Penfed Union at 1.5% payback on balance) - would be $300 per month plus a mortgage payment at say 3.75% (other $370 per month) puts cost of financing at $670 per month. No way right? Or am I missing something major? I assume I am as I see HELOCs as hot topic on BP so assume they are viable somehow. 

Q2 - Is there a better way to use HELOC in property? 

Any thoughts or guidance most appreciated.

Thanks much, Greg