Is a HELOC the ticket to becoming a real estate investor?

[Molly Bustamante]

Hi BP Community! 

As a first time real estate investor, I am currently sitting on some equity on a townhome I purchased in May of 2020 and looking to invest in a second property using that equity as a down payment. My plan is to rent out my current townhome and use the HELOC to purchase a second property (hopefully within the next year while the housing market in Phoenix continues to deflate) that I will then use as my primary residence.

My current property would cash flow a few hundred dollars a month which would be enough to cover the cost of the HELOC for the first 10 years only paying on interest. However, the process of using a HELOC to purchase another property seems a little too good to be true so I am throwing a line out to the community to see if anyone has any advise on things to be cautious of when entering into this kind of deal.

Any and all advise is much appreciated! TIA :)