Best way to utilize 60k line of credit

[Jake Engle]

Hi everybody,

I am new to the forum and very intrigued by the level of support most of the users seem to provide each other. I am hoping some of you savvy investors could provide some insight on the best way I could utilize a 60 k HELOC.

I am looking to get involved in the rental world and have been eying up a property that is listed at 59k. I (being a RE agent) showed the property to a client and immediately realized the potential with very minimal work, strictly cosmetics. When comparing all rental comps in the area, the property (3 br) should rent for 1000/month.

I have the available equity in my home where I could open up a line of credit for 60,000 with a rate of prime minus 1%. Would a smart investment strategy for the long run be to offer a cash deal, which I believe could get the property for 40,000, or use the line as a down payment of 20% to have more available for a second property.

I have been doing as much research as possible with reading books and following threads on here. I would really appreciate any advice you guys could provide to best utilize my available line of credit. If going the direction of opening a line of credit is crazy, please advise and I will look into other options. Thanks for reading and I appreciate any wisdom you could provide.

[Ben Bakhshi]

@Sean Salandy, yes, I have used a HELOC as a down payment on another home. Rates have been low enough that I am not paying down the HELOC and reinvesting funds.

Yes, if you buy cash from your HELOC you may get better deals.

But, most lenders look for a "seasoning" period of 6 months. Make the phone calls to your lenders to find out. In some cases you have to wait a year.