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Updated over 2 years ago, 08/10/2022

User Stats

60
Posts
36
Votes
Andre Galaviz
Pro Member
  • Rental Property Investor
  • Denver, CO
36
Votes |
60
Posts

Is getting a HELOC on my primary a good strategy to start a hack?

Andre Galaviz
Pro Member
  • Rental Property Investor
  • Denver, CO
Posted

Hello BP!

My wife and I are planning on renting the downstairs portion of our house to start our investment journey. To do this we're going to add an additional room and a kitchen area to make it a 2 bed/1 bath. The updates will cost around 25K. We could pull that out of an account earmarked for the next investment property (house hack #2), but I've heard people say that they often get a HELOC on properties, so they can tap into the HELOC for any future purposes (say, updates to the next investment property).
Here are my questions;
1. Does it makes sense to get a HELOC and continue to save over the next 12 months we are obligated to remain in this property as our primary (rule for getting the HELOC as I understand it)? 
2. If yes, does it make more sense to lock the rate for the remodel costs for a longer time period (180 months), vs shorter (36 months)? Renter's monthly will cover HELOC payment in either scenario and I would want to pay off as quickly as possible. I'm thinking longer allows for reserves for vacancy, cap ex, etc.
3. Once we move out and rent both upstairs and downstairs as two units, is there anything I need to do to keep the HELOC in place?  Can it be pulled if we are not in it as a primary?

I will ask questions to potential lenders as well, but of course, any insight from experienced investors is very much appreciated!

Thanks!

  • Andre Galaviz
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