HELOC Double Leverage Strategy

[Jeremy Keeler]

Hello all!
I haven't been in the forums in a while, been more of a lurker. But I find myself at a point on my BRRR journey where I am getting very close to finally pulling the trigger on my first purchase. My plan is to double leverage my first several properties, laying out as little cash out of my pockets as possible. I will use a HELOC to pay for a hard money loan and all the fees associated with the loan. I will do this during my draw period and only pay interest on the monies that I end up needing to pay the hard money payments. Then after the property is completed and rented, do a cash out refi, pay off the hard money lender, and if I do it right even pay off the HELOC.
My question is this. When I'm sitting down with a loan officer discussing the HELOC they will inevitably ask me what I plan on using the loan for. While I do have some home repairs that will need funding, the main reason for the HELOC is acquiring buy and hold properties. Do I tell them that? Do I omit that? Should I tell them I plan on using the money for investment purposes, will that scare them?

What do you guys think?

[Curt Smith]

For Heloc ALWAYS ALWAYS say home improvement!!!! If you say invest in bitcoin (LOL) you'll get denied (honest). They will turn you down if you say something crazy. I agree with them. If someone says they want to gold futures on leverage with the HELOC funds: beep, the hook comes out and you are out-a-there. Only safe improving the home makes sense.

I'm certain others will say they didn't say home improvement and got the heloc, but if you want to play it safe, not risk some behind the scenes risk adjustment on the terms, then say your family is expanding and a new kitchen and few bedrooms are your current plan...   :)