Beginner investor - question about taking on HELOC and mortgage for purchase

[Emily Holbrook]

I'm a new-ish investor and am closing on a $90k HELOC within two weeks. I would like to use this money to invest in a rental property (hopefully a small duplex). Seeing as $90k will not likely cover a duplex, I would also need to get a mortgage. Has anyone ever done financing this way? Combining a HELOC and a mortgage? Also, this would create a less-than-ideal CoC ROI situation. My main goal is cash flow. Do I forget about CoC ROI and use another calculation when analyzing properties? Help!

Looking for any advice here. Open to any and all suggestions as I'm still learning. 

[Jeff Roth]

Hi Emily-

Congratulations and great question!

Yes, you can certainly invest with a HELOC. Remember the rate on that will float up if the fed continues to raise interest rates.

You might ask if you can refi the HELOC into a Home Equity Loan after buying the investment property to keep your interest rate from floating higher.

You can also look into doing a refinance to just have one loan if you buy the property well enough or if enough equity exists to do that.

Sometime there is a period of time from the initial purchase before you can refinance so talk with your lender.

To Your Success!