Financing Brrrr’s & Flips With Heloc Or Cash?

[Michelle Scott]

Hi All, 

Looking to run my business plan by some pros for some feedback, advice and/or suggestions. 

We purchased our 1st SFH Brrrr in Nov (via conventional financing) which we plan to have done soon to refi.

Our goal is to purchase one Brrrr per year to build wealth &  do one flip per year to build cash to invest. We are hoping that each Brrr will be double in size, so our next one would be duplex or more, then 4 units or more & so on with a goal of eventually getting to a few small commercial properties & ultimately reaching 10k per month in pure cash flow. 

Here is the current strategy I’m tossing around in my mind - We owe 265k on our primary @3.75% for 30 years (just refi’d in Aug for the cash down for our brrr). I I’m unexpectedly coming into an inheritance at the end of the year plus I think I could pull together all of my cash options to get to 265k & pay off our primary. It was appraised @371 so I’m thinking we could get a heloc for around 300k (80% ltv) plus it would significantly lower our debt to income allowing us to scale. Also, then we could act as our own bank drawing from our heloc for the brrrr or flip cost & repairs and repaying once we refi so we wouldn’t need to use hard money & would only need conventional when refinancing the completed properties.

Would you use this strategy or is there a better way to do this?

Any pros or cons would be greatly appreciated.

Thank you so much!