Interest Only Loans

[Andrew Bertram]

I am looking into interest-only HELOCs. I am trying to do some investing in Baltimore, Maryland on properties in the $40k-$50k range and with rehab costs keeping the total amount that I am into the home at or under $65k. At current rates, I could get an interest-only HELOC w/ a 7 year term for around $210-$270 per month and at the end of the term I could pay off the loan or refinance. I like the idea of the interest only especially because I plan to target section 8 renters who can take a few months to get into the home and this would keep the holding costs extremely low. Additionally, the extra cash flow could be used to pay down the principal or to save for another property. Does anyone have any experience with this? I'd love some input from some people more experienced with this type of thing.