To HELOC or not to HELOC?

[Nicole Heasley Beitenman]

Hi BP! 

I currently live in a SFH that I bought with an FHA loan and house hack by renting out the spare bedrooms. I saw this as my "starter home" and did not buy with an REI career in mind. Now that I know more, I want to kick off my BRRRR strategy by doing a 203k on a MFH. I plan to keep my current SFH and rent it out.

I refinanced my current primary so I could get a 2nd FHA loan. When I refinanced, the appraisal came back about $20k higher than my original purchase price back in 2016.

Here's my dilemma: Should I take out a HELOC on my current primary before pursuing the 203k? It would either help fund another rental, pay down other higher-interest debts, go towards improvements on my current primary, or serve as an emergency cushion.

That being said, it's a really small amount. If a different appraiser values the house lower, I've just wasted time and a couple hundred bucks. Is it worth pursuing the HELOC, or should I just start working toward my next house hack?

TIA!

[Karl Krauskopf]

Why not do both in tandem? Have access to the HELOC but pursue the 203k multifamily. Presumably the only downside would be some minor annual fee for maintaining the HELOC, but that's likely pennies compared to what you're talking elsewhere for an investment.

I took out a HELOC (110k) on my primary here in Seattle for a duplex purchase in Spokane with some funds leftover. I plan to use the leftover capital to purchase and fund 2-3 fix and flips utilizing hard money loan to repay that debt, freeing up the original principle for further buy and hold multifamilies/apartments.