First position HELOC + Rental property cashflow strategy

[Rick Hart]

I have been brainstorming what I believe would serve as a dual strategy to play the rental property game the right way. Combining a 1st lien HELOC in lieu of having a mortgage. The advantages of a HELOC over a mortgage are not obvious at first glance. It's in the finer details where it shines. True, you can achieve basically the same amount of interest reduction and save many years of time to debt elimination through both the "send in extra payments" strategy and by having a 1st lien HELOC but having the equity available (considered seasoned) at any given time to jump on a distressed property as well as combining many advance strategies such as offsetting HELOC interest onto 0% CC's, using 401k loans, bonuses, inheritances, letting property taxes, insurance payments, savings, your checking account cash sit in the HELOC to work down its balance until any payment is due is very beneficial. The minimum amount due on the HELOC works itself down lower and lower as time passes unlike a mortgage where the payments are the same regardless if you make extra payments or not. This provides security knowing that you can always fall back on this minimum payment in hard times. In a mortgage, your money is trapped once it goes in and is expensive to take out. Has anyone actually practiced and combined the two methods above? I have two properties where one does not have a mortgage but only a 1st lien HELOC and it has been phenomenally effective. The other is a mortgage at a 3.625%, 30 year fixed. This should be a really good discussion!

[Kerry Baird]

@Pierre Eade, Caeli Ridge of Ridge Lending Group offers the first position line of credit. Tell her I sent you.

@Bernadeau C., I have used TD Bank and PenFed for investment HELOCs.