Using HELOC to invest in 1st rental property smart?

[Brandon Clark]

Hey Guys,

I have a single family home that I currently live in and I owe 104k on it. My real estate agent just sent me some comps on houses selling at 145k, 138k and 129k on my street. I will apply for the HELOC and hope to get enough for a down payment on a duplex rental property. Being that I am new to real estate investing, would this be a smart way to get the ball rolling in my investment venture?

Thanks in advance

-Brandon

[Mike Wood]

@Brandon Clark If you use conventional mortgage products, 5% down on investment properties is not possible. As stated before its 20% (SFR) to 25% (MFR) down payments (based on the appraised value). These are Fannie & Freddie Mac guidelines. You might be able to find private money with less down payment, but 5% is likely impossible to find.

The only way around that would be as @Matt Moldenhauer mentioned, buying houses as primary residences and living in them for at least one (1) year before moving out and turning them into a rental.