Using HELOC on first purchase.

[Joseph Pilolli]

Hello all! 

First time investor looking for a little advice. Getting into rental real estate investing has been on my mind for about a year or so and I’ve been consuming books, podcast, etc. I feel like I have my head wrapped around it enough to get started and get more education on the job. 😁

My biggest dilemma is the initial investment for the down payment on the first property. I have a 9 to 5 which I plan on keeping, so all money earned from cash flow will be reinvested and saved to be used on the next property. I am not necessarily trying to replace my 9 to 5 simply retire earlier than 65.

I am 42 years old and I would need at least a year, if not two to save up the extra money needed for a down payment. I do not plan on discontinuing my monthly contributions to my investments in the stock market, nor want to pull any money from existing investments. However, I will be curious to hear if any of you believe that’s a better idea than the below strategy.

I say all of the above to say this. Has anyone used their existing residence equity (Their HELOC) as the down payment on an investment? If so, what strategy did you use to pay off your HELOC as quickly as possible? The way my HELOC was written, it is a minimum monthly payment of interest only. That gives me a little bit of peace of mind in case my property stays vacant for a little bit while I get it ready, but I also don't want my primary residence to be on the line for too long.

Any advice would be greatly appreciated!

Thank you!

Joseph