Thoughts on HELOC for rehab

[Ali MirRasekhian]

I'm looking at purchasing some BRRRR properties and have been running into high interest/high fee hard money lenders who also have minimums that some of the properties don't meet. I'd love to hear feedback from the community on using a HELOC for the Rehab of properties and funding the purchase another way.

[Troy DeLong]

If your HELOC loan is big enough for the purchase and rehab, I highly recommend you do it! 100%.

A HELOC is essentially a high limit credit card that you pay yourself interest on. No sense in paying interest to someone else at much higher rates and fees. When it comes time to writing your offer, a HELOC is considered cash. Hard Money is NOT cash, but still just a loan/mortgage when writing your offer.

Plus, any HML will want to do inspection draws (depending on size of rehab) and will just slow you down. I would argue that the only difference between HELOC and a HML (or Private Money) is 'who is the bank' and 'what are the fees/interest'. Risk on the purchase and rehab doesn't change.