How Best To Use A $300k HELOC

[Jon B.]

I recently took a $300k HELOC on my primary residence with the intent to purchase an out-of-state rental property (mid-west or south). The plan is to purchase a value-add property under market with all cash (i.e., the HELOC) and BRRRR it. I have some cash reserves for closing costs, rehab and PITI until I can cash-out refinance. I figure I would only target properties with a DOM of over 30 days to leverage any desperation a seller might have. Plan is to rent the property as a long-term first and maybe transition to a mid- or short-term down the road. I know long-term rentals are not as lucrative but I want to make sure the numbers work at that conservative calculus and build from there.

How do prevailing interest rates and other conditions in the current market impact this strategy? Is it realistic to BRRRR with a HELOC for a long-term rental right now? What is a reasonable rate of return in today's market? What other considerations and blind spots should I be aware of with this strategy?

I recognize the challenges of today's market for investors and that expectations should be tempered.  I don't necessarily need a double digit return but the property has to at least minimally cash flow.  I definitely do not want to pay out of pocket.  I just want to get in the game and complete my first deal without screwing up and setting myself back.  Appreciate your insight and thoughts.