Beginner Strategies with approximately $165K in HELOC (Seattle)

[Gabe Storm]

I purchased my condo in 2012 for $245K and I currently owe about 210K. Comps in my building support a current value on the low end of about 430K, which would give me about 220K in equity. Assuming I can access 75% of that, or 165K, via HELOC, what are some good strategies to get started? All replies are welcome, but I would appreciate in particular insight about the Seattle market, as that is where I'm located.

[Neil Henderson]

I would recommend using the HELOC as short-term debt, no more than 12-18 months. This probably limits you to either flipping or BRRRR investing. I cannot speak about specifics in the Seattle market, but $165k doesn't sound like a lot to work with in that market, unless you are going to venture out into the tertiary markets well outside of the Seattle Metro area.

We used our HELOC, $175K, to fund the purchases of BRRRR properties out of state. In each case, we didn't have the funds from the HELOC tied up for more than 6 months.

Regardless of what you decide, if the strategy eventually involves placing long-term debt on the property to replace the funds from the HELOC, one of your first steps should be to TALK TO A LENDER about your plans. Explain to them exactly what you plan to do and where your funds will be coming from. Not every lender is going to be comfortable doing a cash-out refi or with you using borrowed funds from a HELOC. Plenty of lenders will be fine with it, you just need to ask around, but do NOT purchase a property until you have a lender lined out.

You should be talking to an end lender before you even go out looking for properties.