Should I use a HELOC in this Market?

[Ibrahim Yamini]

I've been slowing getting myself ready to purchase a second property and it seems like a HELOC is the way to go. Unfortunately, the information I've been getting from YouTubers and other sources doesn't seem realistic to my situation.

For the sake of argument, let’s say that I’m able to pull $75K out of my house to buy a property here in Phoenix AZ where the market has skyrocketed.

There are people saying that you shouldn't use a HELOC as a down payment on a house, because then you will have to pay down the HELOC, your primary mortgage and the new investment property if you haven't already found a tenant.

Another option mentioned was to buy the house outright with the HELOC. Then take the money out of the investment property to pay the HELOC right back.

The other advice I've seen was that you should only use 50% of your HELOC. Which for this scenario would be $37.5K.

I can not buy a house outright for $37K in Phoenix unless it’s a manufactured home, which I have zero interest in because they don’t appreciate.

None of these options seem feasible for my situation because there aren’t any decent in homes in my area under $250K.

I guess my question is, how do I move forward? Should I use a HELOC as a down payment contrary to popular opinion? What's the next step if your funds are limited?