What would you do? Potential to HELOC on one of 4 rentals to expand portfolio.

[Jay Orchid]

Hello! New to the BP forum and joined out of curiosity for a hypothetical scenario.

I know everyone's situation is different, and everyone has different needs and priorities within Real Estate.
So I was curious on one of the many situations one might find themselves in.

In this scenario I wanted to ask if a HELOC on either your primary or an existing rental property out of 4 total properties would be a viable strategy for acquiring practically " turn-key " Multi-Family rentals?

If you were able to pull out $500,000 in existing equity out of a paid off rental and disperse those funds to acquire 2, 4-unit MFR properties and had the income to support any future CapEx and the interest payments on your HELOC ( including the extra income to paydown the loan ) would there be any " gaps " or problems I'm missing in this situation where it would be a bad enough idea to not go through with acquiring more properties through a HELOC on 1 of 5 properties you own?

Also how do folks feel about Real Estate buyers who aren't investing for maximum Cash-flow, but instead investing for long-term equity, appreciation, and eventual cash-flow? Since my scenario uses essentially turn-key condition multi-family rentals in an appreciating market ( West Coast major city ).

[Matthew Kwan]

You can always open HELOC or line of credit from your primary house or non primary house, assuming you have sufficient equity and income to qualify. You can obtain up to 90% LCTV for your main primary house that you are living or 80-85% for your investment properties. Rates are typically higher than a traditional cash out refinance, however at least you are not getting the full loan amount + you have the flexibility to draw/tap in the money whenever needed.

@Carlos Valencia @Albert Bui