Use HELOC for STR down payment?

[Ryan Hampton]

I'm considering investing in short term rentals. I've been working on saving up a down payment for my first rental but curious about using a HELOC to take advantage of the equity in my primary residence for the down payment. What do others think of this approach? Is it better to just keep saving until I have the appropriate down payment? Thanks for the advice!

[Marco Egurvide]

Hey @Ryan Hampton I am doing the same thing. I was lucky enough to find a credit union close to me that offers 3 years of a fixed rate before becoming fully variable. I believe more due diligence is needed to make sure your numbers pan out so you can pay back the loan as much as possible before payments include principal as well. I think its not a bad play if you are planning a flip or BRR'STR'R* and the cash out refi can pay off that balance. I am still underwriting and looking for the property so I cannot comment too far past what I have already done. Good Luck!