Using HELOC to BRRRR and its effect on Debt/Equity

[Patrick Sanders]

Greetings,

I am looking at purchasing a rental property with a HELOC as we have a significant amount of equity in our home. I'd like to purchase the property using the HELOC as a cash purchase, rehab the property, rent it, and try to refinance the property to get most if not all of our money out of the property. I would then like apply the new loan directly to the HELOC to pay it down or pay it off completely. In this situation, will the HELOC count against us in a debt/equity calculation? I would think the bank has no guarantee you will pay down the HELOC with the money and must count it against your debt. If this is true, are there any ways around this? Any thoughts from the more experienced would be greatly appreciated.

Patrick