Heloc as down payment for long term rentals

[Koo Sharifi]

Hi. What do you all think of using heloc plus my own saving as a full cash offer for a property that I am intending to hold for a long time. Have you done this before? What are the pros and cons as opposed to obtaining 30 year financing?

[Timothy Lewis]

@Koo Sharifi, I'm sure that's a very popular strategy here. Look up the BRRRR method---buy, rehab, rent, refinance, repeat. The rehab and refinance parts suggest the property needs work, which may not be your strategy. The biggest downside is that your return on investment will be lower due to the lack of leverage. A big plus with your approach is you lower your risk of losing the property. I would caution that you should be sure to have reserves in either scenario.