How can I leverage existing equity in my primary residence?

[Dustin Brazeau]

I'm looking into getting into real estate investing, or more specifically purchasing my first buy and hold rental. I currently do not have any savings I could dedicate to a down payment right now, but I do have about $300,000 equity in my primary residence.

I live in a HCOL area, so I'm looking into purchasing a rental out of state. Being new to real estate/rental property investing, and because I am looking at non-local markets, I was leaning towards more of a turnkey type rental property in LCOL area and hiring a property manager.

My primary goal is start building a rental property portfolio with a focus on cash-flow.

I refinanced my primary residence a few years ago and got a pretty good 30-year fix rate of 3.375%, so giving my current rate and the cost to refinance, doing a cash-out refinance for the rental property down payment doesn't seems like the best option. Another alternative I'm looking into is possibilities of using a HELOC or a combining the HELOC with whatever I can save in the next 6-12 months for the down payment and closing costs.

I've ran some rough estimates and it looks like if I use a HELOC for 100% of the down payment most properties would more or less break even on cash-flow for several years after factoring in payments to payoff the HELOC, but as I mention I've only done some pretty rough estimates.

So I was wondering what you guys have done to leverage your current equity to purchase rental properties. I've come across the BRRRR strategy, but as I mention this being my first rental property and it being out of state I feel like the extra risk associated to rehabbing and refinancing a property is something I'm not sure about and is why I'm leaning toward a more strait forward turnkey type rental. I know I would be give-up a little cash-flow by buying a turnkey and using a HELOC for some or all of the down payment, but I think I would be ok with that trade-off as long as the property would still be cash-flow positive and it would allow my feet wet and establish a remote team were I could eventually buy more rentals.

Any input or suggestion on my situation and thinking process, as well as other people's experiences doing something similar would be greatly appreciated.

[Todd Powell]

@Dustin Brazeau I have been using and increasing my HELOC limit over the last 15 plus years. Dave Ramsay would clearly object, as at one point I owed $550k on two HELOCS interest only! Ouch, but I have it paid off and now have cash flowing properties around $12,000 per month. It has not been easy, and had to flip to pay down debt as well and use my cash flow, but at 52 years old I am beginning to see the light at the end of the tunnel.

Check Keybank, as that is where I secured a 90% LTV on my personal home with 15 draw period and prime minus .25% point for interest only rate. I love smart leverage and only buy sweet deals. My CAP rates no one would believe. Those 5-6% CAPS are not for me !