Most HELOCs have variable rates. If market interest rates rise, your monthly payments could increase significantly, eating into your rental profits.
Ensure the rental income (after expenses and the primary mortgage) comfortably covers the HELOC payment, even if interest rates rise by 2% or 3%. using heloc to buy rental property
You are essentially taking on debt to acquire more debt. If the real estate market dips, you could end up "underwater" on both properties. Strategic Tips for Success Most HELOCs have variable rates
Using the HELOC to cover the 20% to 25% down payment required for a traditional investment property loan. The Benefits your monthly payments could increase significantly
Maintain a cash reserve to cover vacancies or unexpected repairs so you never have to choose between fixing a rental roof and paying your home’s HELOC.