HELOC as a Down Payment?

[Shane Bishop]

Hi BP Community,

I have a question from a family member about purchasing a second home and possibly using a HELOC to do it! I, myself, am new to the real estate investment world so I have not looked too much into HELOCs as my wife and I just purchased our first home for a house hack. My dad purchased his home 10 years ago in a nice neighborhood for $220,000 and has roughly $135,000 still to pay. His next door neighbor just sold a smaller, but very comparable home for around $380,000. We were thinking that he could probably sell his home somewhere in the ballpark of around $400,000.

He is currently living near Greenville, SC and is looking to move somewhere along the South Carolina coast. He is debating on whether to sell his current residence or keep it and turn it into a rental property. However, he would need to somehow access his current equity in the home to have enough for a down payment on another home, whether that be through a sale, HELOC, or cash-out refi. What are your thoughts? Reaching out to the community for any and all advice!! We would love your help!

Thank you,

Shane