New Investor from Colorado Springs

[Trent VanHorn]

Hi all! My name is Trent, 28 y.o. and I currently live in Colorado Springs and looking to get into real estate because of the opportunities it provides. I've been reading all the books I can get my hands on for the past month or two and absorbing all the podcasts as well. I was born and raised here, went to school in Fort Collins for a Mechanical Engineering degree, and found a job back in the springs working for Lockheed Martin. Ideally I would love to buy rentals for cash flow and get out of the rat race by the time I'm 45 or at least have the option to do that.

Now onto my current plan... I currently have a primary home valued around $310k with an outstanding mortgage of $173k. I wasn't quite sure how to best tap this equity but I believe the best way to do this is by getting a HELOC. I was going to use this as a down payment on a 4 plex or other multi family and rent it out for the cash flow and appreciation. Is this the better route to go vs a home loan or even a cash out refinance? Seems like its pretty common around here to use a HELOC as a down payment. My financial advisor suggested a cash out refi but only because he errs on the side of caution as he lost his real estate lending business back in 2008 and likes the lower risk of a fixed interest rate. Granted with a HELOC I can tap into more equity but comes with more risk of the variable rate. I would love to hear opinions or just general beginner advice! Thank guys! Looking forward to learning from everyone

[Jeremy Norman]

Welcome. I am also new in the Colorado Springs area. I hope to see you at some of the local meetups at some point. 

This is one of the better ones here in the springs: https://www.meetup.com/Colorado-Springs-Real-Estate-Investor-Association/events/pwphgryznbcb/

Atlas Realty (@Jacob Mueller) also puts one on here in the springs that's worth visiting at least once. (They also do Denver, but I think it's the same content). 

As far as loans... From what I gather, HELOCs seem better suited as a replacement for hard-money and short term loans where rate changes over a few months are unlikely to be a problem. Cash out refinances are better for any money you may leave in a deal (turnkey/traditional or leftover from BRRRRs), especially considering where rates are at the moment. (Probably going the be the cheapest money you can put into a deal @ <4%) If you really need every last penny, HELOC might work. That's all theory though - we'll see what more experienced people say.