HELOC or Mortgage pros and cons

[Lawrence Neufeld]

I have significant cash reserves, but do not want to deplete it all purchasing a multi-family property. Are there downsides to using a HELOC, in conjunction with cash to purchase the property given its ability to allow me to act quickly, rather than applying for a mortgage for that same property.

Thanks Lawrence

[Jonathan Bombaci]

The main benefit we see to using a HELOC is you are essentially making a "CASH" offer. This can be a huge advantage in any market, faster closing, less hoops, and you can buy things that won't pass conventional financing "as-is". If your goal is to BRRRR then you refinance the property after the value add work is done, that becomes a mortgage and it frees up your HELOC for your next cash purchase. We help clients with this strategy in Massachusetts pretty regularly. I think we have 3 active clients deploying this strategy right now. Greater Boston is very competitive, has been for years, "CASH" offers are a huge advantage in the marketplace.