Considering HELOC with fixed rate option

[Clare Yuritch]

We have a HELOC with PenFed which offers us an opportunity to fix the rate on any portion of the (or full) draw. We currently have a promotional rate of .99% until 8/15. Following that, our variable rate is Prime + 1.5% and if we want to fix the draw, would then be +.75% for a 20 year term (principal + interest payments). So right now, that is about 5.75% fixed, but by August could be closer to 6.5 - 7.25% based on planned increases in federal funds rate.

We are purchasing our second BRRR property in two weeks and between purchase + rehab are estimating about $200k. My husband will become a full time real estate professional with this purchase and leave his day-job. Our plan is to ramp this up and have about 2-3 ongoing at any time (possibly more depending on our ability to recycle and grow our funds).

So this is complicated! I'm trying to think through whether it would be good to fix these low rates and draw the full amount or substantial part of the balance, knowing the current interest rate environment and our intent to ramp up the BRRR activity.

I think our actual payments each month would be higher, and interest portion more significant. We'd be able to afford the higher payments so that isnt the biggest concern, and I think it would work that the principal elements would just go back into the HELOC as available funds. On the interest side, I'm asking my CPA as I'm not sure if the HELOC interest on the fixed rate (or variable - i'm not sure) is deductible.

Has anyone come across this? We like the access to funds for BRRR opportunities, but want to make sure we're not missing something on the fixed rate pros/cons!