Best HELOC Strategy for Buy and Hold Properties?

[Pavel K.]

Hi all,

I'm curious as to how some of you are utilizing HELOC and strategies when it comes to investing in buy and hold properties/rentals. Let's assume I will not use it for fix and flips or short term deals.

Here's a scenario I want to run by you guys:

Let's say there is a unit on the market for $150k. I decide to tap into the HELOC and borrow the funds to put 25% down towards the downpayment only - the rest I just get a traditional conventional 30 year loan. This does sound good since I do not have to use any of my own money towards the downpayment.

The question is: what is the best strategy in terms of repayment of the HELOC debt. Do you stretch it out for many years and pay INTEREST ONLY? Let's assume interest only is $80/month in this case.

Assuming the numbers work ... do I just treat HELOC interest rate monthly expense of $80 in a similar way you would calculate things like monthly estimated repairs or monthly utilities and then see what kind of cap rate this type of deal provides?

My goal is to make sure the property has positive cash flow after all expenses including interest rate towards HELOC is paid off.

Just curious if anyone has any recommendations how to be strategic with using HELOC.

Thanks! :)