HELOC: Good or Bad?

Question

Hello,

I have been trying to figure out a better way to purchase real estate without burning through cash.

I’m considering opening up a HELOC on both my rental properties since their value has grown since purchasing them and then purchasing more Real Estate that way.

Interested to hear peoples thoughts on this.

Travis Timmons · Answer

If you find someone to give you a HELOC on investment properties, let us all know.

Sriv Nava · Answer

if you happen to have account in NC SE credit union :-)

https://www.ncsecu.org/Mortgag...

"Our home equity line of credit product is available for primary residences, second homes and rental properties, with no complicated rate buy-downs or discount points"

Matthew McKee · Answer

a HELOC is some of the cheapest money you can barrow. Where there are institutes that will allow you to barrow against an investment property they are at a lower LTV. @Vincent Carminati why wouldn't you want to barrow against your primary residence?

Jay Hurst · Answer

@Vincent Carminati    The issue with using a variable rate line of credit for a down payment is that will be long term debt. The variable rate is very likely to do nothing but go up over the next year (and who knows how long) as the fed is pushing up short terms rates. Long term rates have gone up for sure but not as much as short term.  So, if you are looking to borrow long term you would be better to maturity match and get a fixed rate second lien for the down payment funds.

If you were going to use the line of credit to purchase in cash then refinance into long term debt paying back the line, then you could rinse and repeat, the variable line would be the correct vehicle.  We have a both options in but we find a lot of folks think they want a line of credit when they really need a fixed rate first or second loan.

Vincent Carminati · Answer

@Jay Hurst down payment

Jay Hurst · Answer

@Vincent Carminati   Are you looking to pull enough cash out to buy the new properties in cash? or just enough for down payment etc?

Scott E. · Answer

Using a HELOC is a great way to tap into your equity. And you only pay on the money when you have it "checked out" so that's another nice perk.

HELOC: Good or Bad?

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