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100 thoughts on “Morris Invest: How to Use a HELOC to Purchase Rental Properties

  1. Hi I need equity loan for debt consolidation problem is I have already have 2nd mortgage variable 10000 loan with private company I want to buy out .too much interest changing every year plz help me out my own bank is not helpful because of my credit …Canada


  3. Hello Clayton , are you still working at Fox News ? i Have a mixed use property in what i think is a Class A neighborhood , Abington Pa , The property was a fixer upper in 1986 , i was able to purchase at a very decent price , however i also rehabbed the entire property , and was able to maximize the rental income per unit , i have a equity line of credit , but never used it to purchase other properties , i have approx 365,000 in equity , i also own another class B area ranchplex 3×2 rental this property is paid off , and completely rehabbed i own with my cousin 50% , i have approx a 50% equity of 135,000 in this property , and i also own another desirable class B row home in philly with approx 50,000 equity , i need to make this equity ,pyramid ,into possible other assets ? what would you do with these assets ? im 63 yrs old , and conflicted with what i should do , i like the Passive income , and also need the passive income , these assets have all had a good rental history , with very little vacancy, only 3 evictions for the past 32 years, thanks

  4. I've shopped around for a HELOC and every company keeps steering me towards a home equity loan instead of a HELOC. Why is this and does it suit if I'm trying to buy investment property?

  5. Hi Clayton! I got a heloc but they don’t let me paypark my paycheck or make any pmts from there so it’s getting harder to lower my debt. What should I do?

  6. Can you do a vid to walk us through a real life example of how the numbers work? Theoretically I understand this strategy works but what I don’t understand is how real costs can be covered plus make cash flow on top of that while paying back the HELOC in a short number of years…how do you figure a realistic payment out? Using 50k in 3 years example (not even including things like insurance/taxes/improvement/repairs) the payment would be $1388 per month in order to pay back in 3 years. This is already pushing an unrealistic acquisition amount and payment in my area so sincerely wondering. Also do you wait until HELOC is paid back in full to purchase another property?

  7. I'm so interested in turnkey properties as well but my credit is bad. I have a
    collection placed on my report witch is gonna be there for 7 years

  8. So if one gets a HELOC on their primary residence the new monthly mortgage payment for that property becomes an entirely new mortgage payment that is equatable to the old mortgage added together with the interest of the HELOC(based on how much actually used)? Or are payments of mortgage and the HELOC treated separately? I'm trying to get a sense of how much more per month a HELOC might cost me on my current mortgage so I can plan a rental strategy.

  9. Does this only work if your HELOC is large enough to cash purchase an investment property? For instance if your HELOC is only 20K and the investment property your looking into is 100K could you use your HELOC as a 20% down payment and secure a mortgage on the investment property and still cash flow?

  10. If you are getting a HELOC from the bank and putting that as cash towards a rental property that is still considered as 0% down payment correct? Because all I have done is taken money from somewhere and given it to someone else and I am still liable to pay that amount.

  11. Can you explain the difference between getting a HELOC vs a normal loan on a rental property…my assumption is that if you buy a rental prop say for 350k and your HELOC doesn’t cover it all…wouldn’t you still need another loan…? I’m new to this whole real estate stuff and stock

  12. From what i understand & please verify – The new 2018 tax rule (in effect from 2018-2026) allows interest paid from the HELOC to be tax deductible only if the money is used to buy, improve or build the home that secured the loan. If I borrow against my primary residence to purchase a rental or vacation property none of the interest paid to the HELOC is deductible. Each property must secure its own loan.

  13. OMG, Clayton. I've got to get in on this. My situation now I've been paying off my primary mortgage for the past 20 yrs w/only 2x refi's but I've always been skeptical about using the equity in the house. Growing up I always heard not to borrow against the house. Now I see that's not true! My house is worth $600k & I owe $260k. So this strategy sounds like it's right for me.
    I think I'll be needing to contact your team soon.

  14. Hello. Newbie here. What if my mortgage is already paid off? Would it be wise for me to get a HELOC to buy and hold another property? I want to invest, but don't know the "Real Estate" language yet, but willing to learn. Thanks 🙏🏻

  15. Would you use a heloc as a down payment or use it to buy the new investment property in full, and the heloc acts as the mortgage?

    If you use it as for example a 20% down payment then you have a new mortgage and the heloc to pay. Is that not more expensive monthly?

  16. Clayton question for you. I'm interested in doing a heloc but I dnt have enough equity to pay in full for a property. is it still a good I idea to use a heloc for the down payment? to get me started in the business?

  17. My plan is to find foreclosures/short sales selling for 80% of their vale, put 20% down, then when the time comes Cash out refi my 20% down payment and put it into another property and repeat. My question is can I use a HELOC to pay my 20% downpayment on a property at 80% of value and then cash out refinance and pay my HELOC off?

  18. I have a question, If I using HELOC, for example, I get $300K from my current home equity, Interest rate is 5%.
    Then I use $300K to pay another let say $600K property's down payment, and up on that it created a new mortgage, 300K new debt, interest rate is another 5%.
    Now the question is, if the investment property can not produce more than 10% of 600K total debt return, then it become a negative cash flow….
    How to get through it? Maybe I miss something or maybe my math is messed up… Plz tell me. Thank you

  19. This is a wonderful idea to buy the house but wouldn’t you have to take out a separate loan of roughly 15-20k bc the property you purchase is more than likely going to need to be rehabbed?

  20. Novice level here: How do you avoid commingling funds using this method? Do you designate the Heloc account to your LLC?

  21. I'm super skeptical about the claim you can payoff your HELOC from your rent in 3 years, thats more than a stretch. My thoughts would be why not buy the home with the HELOC, then put a delay financing mortgage on the property. Pay off the HELOC you borrowed to buy the the home. Then repeat.

  22. Seems super risky to calculate ROI with entirely an entirely variable interest rate. Would it make sense to Cash-Out Refinance after closing and some minor repairs? Does the HELOC trash your DTI for such a refinance?

  23. Is a HELOC rate of 7.75%-8.25% good or terrible? Or is that the normal rate. I’m looking at purchasing a rental in Texas at the moment. I really appreciate your advice and insight. You both are so awesome😊

  24. Question:

    If a person has a $300k home, still owes $224k, so roughly $76k in equity. If the bank would loan 80-100% of that equity, can a person still use "just" $60k to start doing this?

  25. Can somebody explain if my 30year mortgage is fixed 4.25%. Why would I get a helco that is over 5% to help pay off my existing 4.25% mortgage?

  26. I want to know more about this… I'm just starting out in real estate investing and I don't really know the questions to ask… Right now I'm dealing with a commercial lender on a property I'm working on buying… Would he understand what heloc is? Also if I have no mortgage on my house does heloc still apply? I've never heard of this and am very interested in what this is about

  27. Love this video. Very smart man. I bought a home with a heloc. At the time banks were scared to give loans for investments. Heloc was recommend by the guy at the bank. The interest rate was lower than a mortgage and the loan balance came down quickly.

  28. Great info, I have been trying to buy properties in the mid-west from California. I get beat out every time by cash buyers, I could have been using HELOC as my home here in California is payed off. Soo many opportunities wasted.

  29. This is the best way to buy rental property! By leveraging your equity. Otherwise it’s just dead money!

    However, you DO NOT get 80% of your equity in a HELOC. The math is you do 80% of the value of your home MINUS whatever balance you owe. That is what you can borrow.

    For example:

    $500k = Value of your home
    $300k= Remaining balance owed on your home

    80% of $500k= $400k

    Therefore you can borrow $400k-$300k= $100k Line of Credit

    Other than that, this Man has the right way of thinking!

  30. Omg thank you so much for this video

    My friends and I were struggling on how to add Helocs into Monopoly!

    This video explanation gave us a creative way to add it to the game!

  31. Hi Clayton! Martin here! This segment is very clear and concise! Yes, I used a HELOC to purchase my 2nd property, a triplex! I put 80% down & used a HELOC to purchase the rental. Once I get the HELOC paid off, I want to start searching for another rental. Keep the great work! P.S. – I love Fox News! 🙂

  32. I'm About to buy my first home soon. Could I buy a property below market value, fix it up and gain instant equity that way?

  33. Ok say your primary residence is worth 100k, paid off and a Heloc is needed to fix up the property a bit & you want to purchase auction properties in full to fix and flip or rent out. Would that be a good idea if still working and able to cover the payment of the Heloc even without rental income?

  34. You’re only making yourself wealthier if you’re cash flow positive, the equity you’re building on the second property is prob just trader for equity you’d be building in your own property

  35. What if I only have 30k in equity should I wait to build more equity or should I use what I have to put down payment on a rental property

  36. I became confused towards the end.. when you use the 50,000 line of credit to buy your next property. That property is fully paid off right? You owe nothing. So the rent from that property is paying back the line of credit? Let's say I buy another property. I would have two tenants paying it back quicker?

  37. The property next door to mine just came in the market and is a brand new property. Is 630k. My banker require a 10% down The question that I have is, my property appraise at 750k , I owe 619. Would i be able to take out a heloc for the left of the value. In order to use the 10% to acquire the next property

  38. Thank you for sharing. Will it make sense to use a HELOC as a down payment or is this strategy only if you are paying cash in full for the property?

  39. i have question reagarding Heloc from the investment property.i just purchase the duplex with 25% down on april 2019. Can i apply for Heloc form this property and invest to buy new house?. Do i have to wait 6 months to get heloc? and last one,is it hard to get heloc from the investment property?

  40. so can you use a HELOC from equity from an investment property? or does it need to be from your primary?

  41. and is he saying to buy investment properties cash paid in full with HELOC or can you have a mortgage with 20% down?

  42. I bought my rental properties cash should i apply for a HELOC and buy another cash rental property..or should i try to get a mortgage?

  43. This guy says your net worth doesn't include your house. Don't listen to this guy. Not to say the approach can't make you dollars, just that this guy lost his credibility with that statement.

  44. This strategy works only if you built a lot of equity on your house and the HELOC itself pay for an investment property.

  45. I have around $100k of equity on an investment property. Can I get a heloc of that ? I mean, can I get a heloc even if I don’t have any primary residence and only have rental property to buy another rental? I mean, can I get 100k heloc from my rental condo to buy another rental condo ? Thank you !!

  46. I tried googling this information and reading about the difference between the HELOC and the loan and none of the articles were as helpful or educational as this video. THANK YOU!!!!!!!!!!!!!!!!!!!!!

  47. But what is the payoff strategy? If I buy a home with a 200k HELOC at 4%, how much I am paying back each month? What is my monthly payment?

  48. I got my heloc for $150gs but truthfully I am scare to start using it because I don't know how my rental will work out, specially now days. My heloc is at 5.7% . Thinking on purchasing an $80,000 property with a montly rental of $1100 per month. Can anyone help me do this math.

  49. Would you recommend a HELOC or cashing out a 401k for your first investment property? Thinking of buying my first rental property this coming year.

  50. I’ve heard you mention in past videos how you should never buy properties in your own name. If you have an LLC and want to use a Heloc from your personal home, how would you manage this?

  51. Hi Morris, I have about 450k in equity but just quit my job. The banks say I cannot qualify to pull equity out of my property due to no income. I want to buy another rental property with this equity. Do you have any suggestions?

  52. So for example, if I have a Mtge of 100K and have equity of 213K after doing the calculation of 80%, Is it a good idea to transfer the balance of the Mtge to the HELOC and start paying down the HELOC or should I continue paying the Mtge and use th equity to buy a new home.

  53. Hi morris what to do when I have a house with my parents I am a student and I want to be an investor with real estate and I want to take a house on a monthly lease where other people will give me a higher monthly lease than I pay and + do it ?? I'm only 19 and I want to do it as soon as possible.

    or should I take a deposit up to 10 000e and when some house sells so try to negotiate with those people that I will backup them and then I will pay them monthly hiring. that I would try to talk that way.

  54. Hi Morris what happens if I want to use a HELOC to open another mortage.. I do not have much equity to buy and transfer . Can I use HELOC AS DOWN PAYMENT ON RENTAL property..???????

  55. US Bank will give you 50% of your personal net worth, not just equity. I've been using this for the down payments on larger commercial properties. Use the cashflow to pay down the HELOC first, since this will be used for other properties prior to paying of the main loan. Also, the HELOC will most likely be at a higher interest rate than the residential/commercial loan.

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