Does a HELOC make sense in this situation?

[Jon Haney]

Hi everyone,

Currently I own two investment properties, and I'm considering taking a HELOC on my first property to cover a down payment for a third. This is my first time with any sort of creative financing, so I wanted to run some numbers by you all to see if this would make sense or not.

Property value of first property: $95,000

Amount owed on mortgage: $44,000

FYI: I’m cash flowing at around $500 between our first two properties, I’m able to set aside $1,000 a month in personal savings from my W-2, and I have around $13,000 in savings with no debt.

Does taking a HELOC work under these circumstances?

I’m sure that I’m missing some important information, so feel free to ask a follow-up question for more details! Thanks for the help everyone.

Jon

[Dave Kush]

You could probably get 75% of the 95k value (less the 44 owes)  if your credit is good. But that said, lending market changing quickly. 

Make sure your first property cash flow covers the payment or include it in the calcs of what you buy. Remain cash flow positive on both properties.