Use a HELOC just for down payment or purchase in full?

[John Michael]

Happy Monday all,

We are looking to start our first BRRRR and have a HELOC for $195k. It appears that our choices to purchase our first property are the following:

1. Use the HELOC to purchase a property outright in cash and pay for renovations.

2. Use the HELOC for down payment and renovations coupled with a traditional mortgage.

In both cases we would refinance asap after finding renters, but curious which of these two methods has better returns or risk? Being our first, I guess we're just a little worried about being over extended with a big HELOC balance starting out.

Thanks in advance and be safe this week fellow Floridians.

Best,
John

[Anna Washburn]

Quote from @Kevin Woodard:

Quote from @Anna Washburn:

Can someone explain the difference between HELCO and hard money? 

A HELOC is a home equity line of credit. The institution gives you a line of credit secured by the property. Hard money is a loan that the institution advances you the capital, just like traditional mortgage or car loan. 

thank you