Overseas Apartment Purchase -> HELOAN?

[Perig Vennetier]

Hi fellow investors,

My wife and I are getting an investment property overseas where my wife is from. It is an apartment that we will rent out. We will be paying the entire cost of the place over the next 17 months from developper.

The most likely plan is to take out a 10-year HELOAN at about 4.5% fixed on my primary house in CA which has a large equity to pay for the property over the next 17 months and then amortize that over a longer period of 10 years. The HELOAN would allow me to free up some of the cash locked in my current house and create a bit of leverage. HELOAN would only be about 14% of the equity so little risk even on a down market.

I am picking 10 years as it is the point where it will allow me to cash flow monthly and it keeps the rates low enough. I could go with a HELOC (30 years) and have a larger line and bigger cash-flow but I don't like the floating rate in the current market and I don't currently need more cash. On the downside, with the HELOAN, I leverage only a small portion of that equity and, as I understand it, I would have to pay off the HELOAN before being able to access more (no plan to borrow more though as I don't want to over leverage). I could also pay more monthly cash out of pocket as my finances allow it but I'd prefer create cash-flow and put that extra cash into other savings or investments.

Any other pros and cons of shorter vs. longer term HELOANs? I could go for something shorter, 5 years (4.09%), or longer, up to 15, 20 or even 30 years although interest rates start to get up there (4.49% @ 10 year, 4.94% @ 15 years, 5.49% @ 20 years, 5.99% @ 30 years at US Bank) and the monthly payment difference start to taper off for terms longer than 15 years.

What's your take o thnis plan overall? Not about if I should or should not buy the property because that's decided but on the plan itself to finance it.

Thanks!