Using 100% LTV HELOC to jumpstart REI

[Ryan Morrissey]

Hey all - I am currently pursuing a 100% LTV HELOC on my primary home that was/is a live-in flip that we decided to stay in for an extra 1-2 years. I plan to use the HELOC to essentially act as my own hard money lender to pursue investments in income properties using the BRRRR method. I currently live in a strong, stable market just outside Boston, MA and the ARV on my home was recently appraised at $170K over our current note. So a couple of questions here: 1.) what are your thoughts about the strategy to leverage equity in primary residence to jumpstart REI plans? There are obvious pros and cons here, but overall thoughts? 2.) can anyone recommend a lender who will do a 100% LTV HELOC with relatively competitive rates and terms and who does business in the New England area? The best I've seen so far is HFCU who is currently offering 5.25% (variable rate) for a 30 yr term, first 10 years interest only required.

[Michael Evans]

I did this with a home I owned back in 2003, and it paid off. i did it with another house I owned in 2005 while I was going through a divorce and it was horrible, and I lost the house (actually ex-wife lost the house). I would pull out 100% of the equity in a house because I don't believe in leaving equity in a illiquid asset, but I wouldn't put all of the equity/HELOC into real estate. Real estate isn't liquid enough for you to sell your position if the market turns against you. Proper Money Management states that you shouldn't have more than 5% of your "bankroll" in any single investment. So I would spread it around.