First Post! Heloc Options for a beginner.

[John Cato]

Hey everyone!  I'm starting the process of looking for my first investment property in the Tampa Bay area. Due to the increase of interest rates currently, do you all see HELOCs as a good option for a downpayment on an investment property? Also, do you all have any recommendations on heloc options in the area? Thanks in Advance!!

[Brian Miller]

Hey @John Cato, I have gone the HELOC route for a down payment to purchase two duplexes at the same time. This was 4 years ago when we had competitive rates and low inflation. I'm not sure that I would do the same thing today because the FED is busy increasing rates, and will probably do that again before the end of the year. FED rates directly impact HELOC rates. We have local credit unions In St. Louis that are offering a locked rate for 12 months, then it is variable after that.

Since we are in uncharted territory with rates and the market, you may choose to use part of your own cash(if available) sitting in an account along with some of the HELOC cash. That way your monthly payments for the HELOC are smaller. That gives you an automatic rainy day fund for the property, and you can pay down the loan faster. Another route is to BRRRR with the HELOC funds, and then cash most or all of your funds out. Just my two pennies worth, but hope this helps!