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Updated over 5 years ago on . Most recent reply
![Pam Holbrook's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/1153248/1621509651-avatar-pamh22.jpg?twic=v1/output=image/cover=128x128&v=2)
HELOC vs Home Equity Loan
Hello,
I'm working on financing and buying my 1st property. I live in Oregon and am going to be purchasing in California where my son lives. He is a contractor.
I was referred to a lender in Oregon who is friends with the property manager and realtor I've started working with in Mount Shasta-where everyone seems to know everyone. I have shared my financial information via dropbox as they are both out of my area.( Several months ago I contacted someone on a realtor.com and I ok'd a credit check before I was ready, didn't do a comparison within 14 days and it did dink in my credit. I didn't go with that lender at the time as I didn't know how to get my financial information to them and wasn't comfortable sending it via the internet. I've since learned how to scan and send them and I real newbie here! ) The mortgage lender isn't able to give me a HELOC as that is given by banks but has referred me to a bank loan officer if I decide to go that direction. The lender wouldn't give me a general pre-qualifaction letter that my realtor was wanting, only willing to give me a pre-approval letter on a specific property.
The current property I'm making an offer on is a bank owned duplex in Weed, CA. It is run down but has a new roof and windows that look like they were put in recently- probably with the help of a program in town that helps low income property owners. It is also in a neighborhood that is high crime per realtor.com. I have some reservations about the property but it is inexpensive for the area and could be purchased with cash (my home value is 200K and paid off) and my son could rehab. It is something we could BRRR. Most properties in the are are 2 to 4 times that much and difficult to find one that will cash flow. In that case of a more expensive property I would need to get a HELOC or home loan in Oregon and then a mortgage in California.
Do I move forward with a HELOC- get the maximum amount possible or wait until I find a property and get a HELOC or home loan depending on that specific property?
Most Popular Reply
![Will Fraser's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/1002880/1630498851-avatar-willfraser.jpg?twic=v1/output=image/crop=3024x3024@0x305/cover=128x128&v=2)
Hi @Pam Holbrook! This is a fun situation to think through, because options are like a stream flowing with bits of gold . . . we just need to sift through to find the nuggets!
If I were analyzing this potential deal, I would call my go-to agent in the area and ask them, "if I fixed this house up like this (share pictures of the probable finished product), would you have ANY hesitations about listing it? What do you think it would sell for?" and the ask my go-to property manager in the area the PM version of those questions. Realtor.com is great for a lot of things, but in my market there are some sizzling hot areas that people clamor to live in that show up high on the crime map.
The local excellent agent and PM will give you a more accurate feel for the area from a sales and an operation standpoint, and if you can sell the property at a profit and can readily rent it for a profit, then you've got some golden options!
Best of luck with the prospecting!