Home Equity line of credit

[Andy Perez]

Hello, Biggerpockets...

I purchased a 4 family building in New York (Bronx) with some equity in early 2016. Now $60K later, I feel the property now has over 180K of equity in it. I've been looking into getting a Home equity line of credit sometimes referred to as a HELOC, but not too sure what the best options I have available to me or even which bank may be more beneficial. I understand that this is money that the bank would give me for repairs/upgrades to the home, but can be used for any other reasons such as to purchase more properties. Has anyone used a HELOC to purchase real estate and if so, what tips can you offer to get started?

[Account Closed]

Hi Andy, 

Yes, the HELOC will give you lots of flexibility on when and what you do with the property. The downsides are 1) if you aren't owner occupying it, you're probably not going to have any options. Conventional lenders will typically only offer a HELOC on a owner occupied home, unless you have a ton of equity in the house or a special banking relationship. 2) the rate is usually variable and will increase as the Fed increases rates, which they've signaled they will be doing steadily through next year.

You should weigh the above against taking a regular loan against your property and locking up the new higher balance at a fixed rate.  If this is a true investment property, this may be your only option.