Seeking Advice, What Would You Do in My Situation?

[Marcel Williams]

My wife and I are interested in buying our next rental property, particularly a SFH and we plan to rent by the room, and possibly go through Padsplit and rent by the room.

I own a duplex from before our marriage which is rented out on both sides and she owns a townhouse from before we got married that were currently living in. Both of our properties have about 100k in equity in them so we were thinking about using getting a HELOC on the duplex rental property and use that money for the down payment on the next property. Our plan is to use the "Sneaky tactic" and for the next few years, the plan is to buy a house that needs a little TLC, fix it up as we live in it and move on to buy another house until were tired of doing it or reach a decent income. Together we make about 120k-ish and as were doing this, were actively paying down our credit card debt which together is about 20k at the moment, just fyi.

I feel like this is a solid plan, but I'm not too big headed to admit that I don't know everything. What would you all recommend we do to get our next rental property? Am I going about this the right way? Is a HELOC a good idea for buying a property?

[Abel Curiel]

Quote from @Marcel Williams:

My wife and I are interested in buying our next rental property, particularly a SFH and we plan to rent by the room, and possibly go through Padsplit and rent by the room.

I own a duplex from before our marriage which is rented out on both sides and she owns a townhouse from before we got married that were currently living in. Both of our properties have about 100k in equity in them so we were thinking about using getting a HELOC on the duplex rental property and use that money for the down payment on the next property. Our plan is to use the "Sneaky tactic" and for the next few years, the plan is to buy a house that needs a little TLC, fix it up as we live in it and move on to buy another house until were tired of doing it or reach a decent income. Together we make about 120k-ish and as were doing this, were actively paying down our credit card debt which together is about 20k at the moment, just fyi.

I feel like this is a solid plan, but I'm not too big headed to admit that I don't know everything. What would you all recommend we do to get our next rental property? Am I going about this the right way? Is a HELOC a good idea for buying a property?

Hello Marcel and congrats to you and your wife on your growing porfolio!

In theory, the plan sounds solid especially since you're both on the same page. In my experience (personal & w/clients) the wife usually doesn't want to pick up and move too often to stick with a strategy like yours. If you're both in and this is your best option, go for it.

On the other hand, looking into multifamily buy & hold properties could yield similar results with less hassle. I'd recommend speaking with local specialists in your target market to look at multiple investment options side-to-side.

Lastly, some of my clients have been encouraged to stay away from HELOCs unless they expect a lump sum (inheritance, sale of other asset, bonus, etc.) to pay off the HELOC in the next year or 2.

Another alternative here could be refinancing although it is likely your rate is well below today's rates.This is not financial advice, I am not a lender... just sharing some insights that have been shared recently. 

All the best!

Abel