Underwriting deals using HELOC

[Avishkar Sabharwal]

Hi everyone

I am planning to use my HELOC for down payments on deals. I have 3 burning questions that I have been trying to get answers to:

1. Given that there is an interest payment attached to the HELOC, it does eat into the cash-on-cash. What kind of cash-on-cash are the other more experienced investors would consider good during the initial underwriting when using a creative financing for down payment?

2. What would be your strategy in a scenario where its a large deal, and forced appreciation creates significant enough value to refinance and pull out the money to pay off the HELOC, but this creates a negative cash flow (I am not in this situation but trying to understand if this is a possible situation and has anyone been in this situation. If yes, then what my strategy should be if such a situation were to arise)?

3. How can I learn more about underwriting the deals using creative financing?