BRRRR with HELOC and delayed financing

[Chuck Hollowell]

I'm getting set to do my first BRRRR deal. After talking with my mortgage broker, my plan is to use a HELOC to buy the property for cash, do the needed rehab, and then use the delayed financing exception to repay the HELOC. Hopefully, if I buy at the right price, make some improvements, and with 75% LTV, I will be able to fully pay off the HELOC with the delayed financing. That's the goal.

My understanding is that the key things to keep in mind for the delayed financing is (1) it has to be done within 6 months of purchase and (2) you have to use the funds to repay the source of the original purchase amount (in this case, the HELOC). So, the mortgage broker's advice was to pull out the EXACT amount of the purchase price from the HELOC to keep the delayed financing process simple.

This all makes sense to me and sounds like a good strategy. I wanted to throw it out to BP to see if others have done this and if there’s any advice, warnings, etc. Thanks in advance!