Looking for Advice in regards to HELOC

[John Philip Eugenio]

Good evening BP,

I currently own a rental property in Oxnard, CA, and I have over $200K equity. I would like to get more properties using this equity. I was thinking about doing HELOC and not cash-out-refinance because the current APR of this property is 2.5% and if I refinance, it would drastically increase my APR.  Therefore, I am looking to apply for HELOC to use it as a down payment for multi-family property that provides a good cash flow (out of California).

Background, I am also in the process of purchasing a primary home in San Diego using VA Loan and live in it for a year (rent it out) and then, use FHA Loan for the next property. Both my wife and I recently got promoted which allowed us to save good amount of money per paycheck.

Do you think this is a good strategy to use HELOC now or wait and save enough money for down payment for the multi-family? any recommendations when it comes to using HELOC? What Bank do you use for investment property HELOC? and which lenders should I use that approves HELOC as a down payment?

-John

[Justin Phillips]

I'm a big proponent of a very specialized 1st position Heloc that's tied to a zero balance sweep checking account. With that ZBA, every deposit and idle dollar is swept directly towards the outstanding balance. That saves a great deal of interest, so my money is working for me in between being deployed for the next investment. With Helocs and simple interest, it's more about interest cost/time, rather than just interest rate. It's been a great tool for us and allowed us to greatly increase our flexibility and cashflow.