"Refinance" Private Mortgage first with a HELOC?

[Chris Majors]

I am under contract to purchase a new primary and using private money for 80% of the purchase price. I've been kicking around the idea of applying for a HELOC immediately after closing instead of waiting 6 months for a conventional cash-out refinance.

I spoke with Wells Fargo and they can do a HELOC up to 80% of the purchase price with no seasoning and I would have the ability to do 80% of the appraised value after 12 months. They said it generally takes 5-8 weeks from application to closing.

I would use the HELOC to pay off the first and pay down the HELOC as I sell some other property.

It seems to me it is smart to use the HELOC as a first as opposed to a 15 or 30 year fixed because there will be times when I can have it completely paid off and not have to pay interest on my primary versus be locked in and have times when I just have cash sitting in the bank account. If I need cash to purchase additional property I can just use the HELOC.

The only downside I can really figure is it will have an adjustable rate.

Am I missing something?  Anyone else do this successfully?

ARV $300k

Purchase price $185k

Repairs $30k

Thanks for your time!