All Forum Posts by: Clint Brown

@Jason M. I just got started in RE investing last spring with a duplex in Colorado Springs. I used a HELOC on my primary for about 2/3 of the down payment and partnered for another 25%. I've been able to pay down the HELOC almost 10% in the first year with cash flow, and hope to refinance out of the HELOC (assuming +/- 4% appreciation/year) in year 5. Most savvy investors caution against using this much leverage and counting on appreciation, but like they say, "you have to get started". It's a bit risky, and I don't love the idea of having rentals secured by primary but this was about the only way I could see to break into this market. Cash flows on multi-units definitely beat SFR, so the higher cost of entry made sense to me.

@Jian Guan totally agree with keeping some reserves for emergencies. I personally don’t think Denver is a bubble market but you could be right. I do think prices are about as high as the market can support but I don’t see them dropping in the near future.

@Dennis Tierney thanks Dennis. Met with my cpa today and he said with the latest tax reforms the interest can no longer be deducted on a HELOC. May be worth checking with your cpa.

@Scott Anderson thanks Scott, it’s good to hear I’m not crazy. Glad to hear this method is working for you.

@Brent Coombs I'm not totally convinced either, that's why I asked!!  We put down over 20% on our primary residence (before I really got interested in investing) so we're essentially taking a loan back on that down payment. 

I closed on the HELOC this weekend, time to search!

Thanks for the response Matt.  We're definitely considering that strategy this fall.  We just moved to Denver in Oct. 2018 so our mortgage states we have to live in our primary residence for 12 months before we can rent it, but I like that approach. 

@Bill S. Thank you for the reply. The plan would be to season the first property for 2 years then refinance to pull cash out and pay down the HELOC. The only way that works in that time frame is with solid appreciation and putting any and all cash flow towards the principal of the credit loan. The other thing that concerns me is paying closing costs to refinance after two years will likely eat up a large portion of the equity/appreciation.

I'm looking to purchase my first investment property and am targeting SFRs or small multi-family. I don't have the capital for the entire 20% down so I'm considering using a HELOC on my primary residence to fund a portion of the down payment on the investment property. I understand this is leveraging a ton but due to the high property values in the Denver metro and relatively high rents I think it can work. Does this make sense? What are other ways to get in the game without having the full 20% in cash?