HELOC and the BRRRR method

[Frank Costa]

Is a HELOC a viable option to buy a SFH with the intent of using the BRRRR method? Unfortunately ready cash is not available but I have plenty of equity in my primary residence. That said my HELOC limit would enable me to pay for the target property in full.

So if I were to utilize this tool, would I be able to do a Cash-Out Refinance once the renovation period is complete? If yes, what's a realistic time period to contact a lender to begin the refinance process? My thought is to repay the HELOC balance ASAP. Also am I overlooking any other obstacles?

Thank you in advance.

[Adam Horowitz]

I don't understand how you're using the BRRRR method.

1. If you Refinance and pay off the HELOC, you won't be able to Repeat and buy another property. The rule on No-Seasoning Cash-Out Refinance forces you to pay all the money from the Refinance back to the HELOC.

2. The only advantage to paying off your HELOC with Cashed-Out Refinance is to secure your property in case of a default on the HELOC.

I have another option for you. Get a Personal LOC instead of a HELOC to fully fund the 2nd property, you can get them at 0% interest for 18 months, no collaterall, no income to verify, just good credit history. This will allow you to Rehab the property, get a renter in, plus, pass the seasoning period. Then, when you Refinance, you can pay back the LOC, you'll have excess cash and equity in your home if needed to buy the next property, plus have access to the LOC. PM me for a Personal LOC up to $250K.