Leveraging your HELOC to BRRRR

[Donald DiBuono]

Hi!

I have a scenario i would like you all to weigh in on. My partner and I took our a HELOC on our homes. Keep in mind, our personal homes are not making any money. We used the HELOC funds to buy a SFH all cash. The SFH needs minimal upgrades. We will STR / MTR the SFH to bring in revenue. There is a local bank willing to give us a loan on the SFH to take out our original investment. With those funds, we will place a down payment on a larger multifamily home.  Essentially we are financing our down payment from the loan we are using from the SFH which was financed from our personal HELOCS.

Does this leave us too exposed / levered? Is this more risky than a typical BRRRR as we are starting with the equity built in our personal homes that dont bring in revenue?

Thanks!