HELOC to BRRRR question

[Michael Bieler]

Hey guys looking for some advice. I currently own a few SFH rental properties, 1. does anyone do HELOCs on investment properties? My Main question is if not my parents primary home is paid off.. They would be willing to open a HELOC for me to help fund BRRRR. Im not to sure on the legalities of this for them. Would they take the heloc for say 100,000 and just wire it to me? Should there be a contract in place? Tax wise what happens on their part with this situation? I just want to have all information down before going through with this. Any help would be great!

[Emanuele Mayer]

Hello Micheal i can do a HElOC on investment property lets chat!

[Najeh Davenport]

I used a heloc to purchase one of our properties. The only responsibility of Your parents would be the monthly payment  so if you take out $100,000 they probably pay like $1000 a month but if you can only take what you need when you need it. For example contractor qoutes you 30k for renovations with a deposit of 10k. I personal would only pull the 10k and when its time to pay the second deposit i would only pull from your parents heloc then. It will say you on the monthly expenses

[Ashish Acharya]

Yes, your parents can take out a HELOC on their paid-off home to help fund your BRRRR, but it’s smart to have a contract in place to outline repayment terms and protect everyone involved. They are acting as your private lender. You pay them interest, which can be deductible at your rental level. They will pick up interest income.

Sometimes, intrafamily loans do not need interest payments.