HELOC investment within personally owned LLC

[Michael Feaga]

I have seen a few threads on narrow topics related to the use of HELOC for funding investments in an LLC but I wanted to ask zoom out a little seek some general feedback on what is likely a common situation. As an investor with access to home equity and cash interested in flipping or brrrr where the initial investment is deployed for a short period, what concerns would folks raise from a tax, legal or finance perspective on the following strategies? I'm thinking specifically about maintaining LLC liability protections, tax implications and overall financial performance of the arrangement (some folks have mentioned making a spread on the interest from HELOC rate and the interest charged to the business - case 1).

1) Use HELOC to fund purchase and rehab, use LLC cash to pay interest on the HELOC

a) In this scenario would a formal loan agreement be required between me and my LLC or just pay the interest and call it a day

b) If I pay the interest on the HELOC personally does that create an issue

c) Do I need to first transfer the money into my LLC account before making the purchase

2) Use LLC cash only for all of the above before refinancing or selling

3) Some combination or something better?

Any suggestions are greatly appreciated.  Also if this has already been squarely addressed that I wasn't savvy enough to find with the search tools please link.  Thanks all.