How Do You Use Your HELOC When Investing?

[Ryan Anderson]

Hi everyone! 

I've been in the process of applying for a HELOC on my primary residence for real estate investment purposes, and have appreciated the insight and wisdom from this community regarding searching for a HELOC.

I wanted to get some further insight into how people recommend leveraging their HELOCS for their real estate investment business. 

For example, do most investors recommend using the HELOC only when you can purchase a property outright, so you can then get a primary mortgage and pay down the HELOC quickly, and then rinse/repeat? Is it ever advisable to use the HELOC to make a down payment on a property that you are getting a mortgage on? In the latter scenario, it seems riskier because you are then essentially paying down the HELOC each month from the rental income, and with a variable rate on the HELOC your cash flow won't be very predictable and can seemingly evaporate quickly. Just curious how different investors like to approach using their HELOCS.

Thanks so much again for your help as I begin my real estate investment journey here. 

[Joshua Janus]

Quote from @Ryan Anderson:

Hi everyone! 

I've been in the process of applying for a HELOC on my primary residence for real estate investment purposes, and have appreciated the insight and wisdom from this community regarding searching for a HELOC.

I wanted to get some further insight into how people recommend leveraging their HELOCS for their real estate investment business. 

For example, do most investors recommend using the HELOC only when you can purchase a property outright, so you can then get a primary mortgage and pay down the HELOC quickly, and then rinse/repeat? Is it ever advisable to use the HELOC to make a down payment on a property that you are getting a mortgage on? In the latter scenario, it seems riskier because you are then essentially paying down the HELOC each month from the rental income, and with a variable rate on the HELOC your cash flow won't be very predictable and can seemingly evaporate quickly. Just curious how different investors like to approach using their HELOCS.

Thanks so much again for your help as I begin my real estate investment journey here. 

What is your variable rate structure for the HELOC? I wouldn't get one that is a wide open gate. That is a lot of unnecessary risk.

*I am not a lender