What Is A HELOC & Can I Use It To Buy Real Estate?

Yes, you are able to use a HELOC or home equity line of credit to purchase investment properties. You can either use the HELOC as a source of a down payment, or even the full acquisition cost.

While this may seem too good to be true, I can assure you it’s not.

You might ask, how?

Simple: once you either have enough equity through mortgage pay down, or through forced equity (renovations), you can choose to utilize that equity! You could either sell, cash-out refinance, or utilize a HELOC. For today’s discussion, we’re just looking at HELOCs.

The HELOC is a great tool that not everyone knows about. It’s great for many reasons, but specifically because it acts as a major credit card secured by your property. This is a line of credit, so you are not charged on the money until you take a “draw” and spend it. Many times, the HELOC is interest only, so you only pay the interest accumulated on the amount you have drawn!

While this sounds great, and it certainly can be if used properly, I do want to caution you to some of the cons! It’s extremely important to have a plan when using a HELOC. You want to make sure you know exactly how long you will need to use those funds, and how you will pay them back. This is critical as you do not want to get stuck paying on a HELOC while trying to pay this balance down.

If you have any questions we'd be happy to answer them!

Nick