I am getting a HELOC. What do I do now??

[Claude Florvil]

I applied for a HELOC. One of my goals is to grow my portfolio to 30 units. I currently have two properties, four units total.

I understand that this money is borrowed money, so I dont want to have it locked in a deal for a long time and pay the interest payments. What is the best way to utilize this HELOC to grow my real estate portfolio and mitigate the risks of borrowing a large sum and not pay it back or worse consequences. I figure a fix and flip project? Cash out refinance, pay off the HELOC and then repeat like the BRRR strategy.

How else have you all used HELOC loans? And what are the risks that I may not be seeing/aware of?

Full transparency in that I do not know the best path forward. I also understand there is no one blanket answer to this question. I guess I'm more looking for perspective. If you are someone that is willing to have a quick conversation on the phone I would love to hear your story and share more of mine. Thank you for making it to the end of this post!

[Dan Thomas]

Quote from @Claude Florvil:

I applied for a HELOC. One of my goals is to grow my portfolio to 30 units. I currently have two properties, four units total.

I understand that this money is borrowed money, so I dont want to have it locked in a deal for a long time and pay the interest payments. What is the best way to utilize this HELOC to grow my real estate portfolio and mitigate the risks of borrowing a large sum and not pay it back or worse consequences. I figure a fix and flip project? Cash out refinance, pay off the HELOC and then repeat like the BRRR strategy.

How else have you all used HELOC loans? And what are the risks that I may not be seeing/aware of?

Full transparency in that I do not know the best path forward. I also understand there is no one blanket answer to this question. I guess I'm more looking for perspective. If you are someone that is willing to have a quick conversation on the phone I would love to hear your story and share more of mine. Thank you for making it to the end of this post!

 I personally have used a heloc to purchase and renovate an investment property, like you mentioned I cashed out at the end and paid back the heloc.  I would say it definity is a risk as you are tying up equity AND taking on an additional payment.

My personal criteria to use my heloc for investments are:

1. Covers entire purchase, entire reno, with money left for reserves, and a couple months of vacancy. (No additional borrowed money for the project)

2. Target re-fi within 6 months

3. Set aside 6 months of cash to pay HELOC payments during reno so I am not scrambling

4. Assume a 10% (pulled out of the air number) interest rate on the heloc. You will likely be in the high 7's or 8's right now but my heloc went up several points in a short time and that could happen again.  You should be prepared for it.