How I’m HELOCing My Way to Wealth 

Key Takeaways:

– The author struggled to save enough money to invest in real estate and felt frustrated with their financial situation.
– They came across a YouTube video about velocity banking, which sparked their interest in using a HELOC to pay down their home and invest in real estate.
– The author explored different options for HELOCs, including interest-only and principal and interest options, as well as different loan-to-value ratios and repayment periods.
– They found that local credit unions usually offer the best options for HELOCs.
– The author used a HELOC to save $50,000 in principal off their home, which saved them $30,000 in interest and allowed them to invest in two apartment syndications.
– The strategy of using a HELOC to pay down a home and invest in real estate can be tailored to different investment strategies and is a way to build wealth with other people’s money.
– It is important to select the right HELOC that fits your financial situation and investment criteria.
– The author encourages readers to not let the equity in their home sit idle and to explore different options for funding their real estate investments.


There’s nothing like spending hundreds of hours looking for property, finding a great deal—and not being able to buy your first investment property. 

I should know. This was my life for years. I listened to hundreds of BiggerPockets podcasts, read dozens of real estate books, and underwrote hundreds of properties. At that point, my real estate portfolio consisted of our primary residence and nothing more.

At that point, I was pretty frustrated. I knew I was better than what my portfolio consisted of—I just didn’t have the money to put down on a rental property. I had been working a stressful job, making just enough to live paycheck to paycheck comfortably. 

Now, keep in mind that there are strategies out there where you can put little to no money down, but I was (and still am) into multifamily syndications, where I needed to put in some capital. 

At the rate we were saving money, it would have taken about seven to 10 years to save a $50,000 investment. That would have been just one investment property. It would have taken years just to get into another property. That was not a timeline I was okay with. At the time, $50,000 was more than I was making in one full year at my job (eventually, I would get a sales job that paid better, though).

I was still determined to invest in real estate, but I was getting more and more frustrated by not being able to come up with the capital. The route we were taking was not going to work for my family in the long run. I thought about borrowing money, credit card advances, etc., but I just could not make it work. 

In the meantime, I was still looking for properties any chance I could. That wasn’t great for me since it only made me feel worse—like I wasn’t living up to my potential. I still wasn’t able to invest, even though our cash flow was improving.

The Turning Point in My Investing Journey 

Sometime later, by random chance, I watched a YouTube video that was not real estate-related. The YouTube gods were in my favor, and the “Up Next” video was about how I could pay off my home in seven years. With the new job, it would have taken me only about two to three years to save up $50,000, or I could pay off my home in about seven years. 

You may have heard of something called velocity banking. I didn’t know it then, but that is exactly what the video talked about. It had me thinking that velocity banking was one of the best routes I could take. I thought, “Instead of waiting two to three years to invest, maybe I could at least start paying off my home.” After all, I grew up with a middle-class mindset, where debt was a bad thing. 

One of the options to pay down my home was by leveraging a HELOC. As I started learning more about HELOCs, I was quite intrigued with the options they offered.

There Are Plenty of Options

I reached out to dozens of lenders to explore HELOCs. Some lenders offer interest-only HELOCs. Some offer principal and interest, and some will differ on fixed versus adjustable interest rates. On top of that, the loan-to-value (LTV) ratios can be anywhere from 60% to 100%. I found that local credit unions usually offer the best options, but it also depends on what terms you are looking for and what your investment strategy is. 

There are also different draw and repayment periods. A draw period is how long you can pull money out of a HELOC. The repayment period is how long you can repay the HELOC. I have seen draw periods from three to 10 years and repayment periods of five to 20 years, but it will vary. 

The closing costs I have seen for HELOCs have been anywhere from $0 to $999. I am sure some lenders have higher closing costs—I just haven’t seen it. Typically, there is an appraisal needed, but not always. It will depend on the lender and how much equity you have in your home. Some lenders may not require a full appraisal. 

There are several ways to use a HELOC, so be sure to ask lenders different questions about rates, LTVs, equity draws, and refinancing.

The Strategy I Used

After speaking with lenders, I analyzed the numbers, put them in a calculator, and came up with a strategy. 

The strategy was really simple: pay down my home and invest in real estate at the same time. That’s where the HELOC came in.

Our first HELOC allowed us to save $50,000 in principal off our home, which saved $30,000 in interest. We still had to pay interest on the HELOC, but that was only a few thousand dollars over the course of a year. But by using the HELOC, we saved about seven years of mortgage payments on the back end. Later on, we refinanced the HELOC to increase its credit limit and invested in two apartment syndications. 

All of this is straightforward as long as you select the right HELOC. As mentioned, we structured our HELOC in a way that worked best for our situation, both financially and for our investment criteria. 

However, it isn’t a “one-size-fits-all” approach. Due to the various HELOC options, it is important to understand your business model and what is important to your situation. 

If you are in other niches (wholesalers, mobile home parks, BRRRR, etc.), you can still use the strategy I’m using. In fact, you could use it even better than I did. It’s a great way to build wealth with other people’s money (OPM). In fact, you could say I took the slow option by passively investing in a syndication as opposed to taking an active route with better returns. 

Overall, no matter what type of investing path you take, don’t let the equity in your home sit idle.

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

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Property Chomp’s Take:

There’s nothing more frustrating than spending countless hours searching for investment properties, finding a great deal, and realizing you don’t have the funds to purchase it. Trust me, I know this feeling all too well. For years, I immersed myself in real estate education, reading books, listening to podcasts, and analyzing properties. However, my portfolio consisted solely of my primary residence, and it felt like I was stuck in a cycle of disappointment.

The problem was that I didn’t have enough money to put down on a rental property. While there are strategies that require little to no money down, I was interested in multifamily syndications, which required capital. At the rate we were saving, it would have taken us seven to 10 years to accumulate enough funds for a $50,000 investment. This meant that it would have taken years just to acquire a single investment property, and that timeline didn’t sit well with me.

I considered borrowing money or taking credit card advances, but none of these options seemed feasible. I was determined to invest in real estate, but I couldn’t come up with the necessary capital. Meanwhile, I continued to search for properties, which only made me feel worse about my situation.

However, everything changed when I stumbled upon a YouTube video about a different topic entirely. The video introduced me to the concept of velocity banking, which essentially involved paying off your home mortgage in a shorter timeframe. Intrigued by this idea, I thought, “Instead of waiting years to invest, maybe I could start by paying off my home.”

Velocity banking involves leveraging a Home Equity Line of Credit (HELOC) to pay down your mortgage. As I delved deeper into HELOCs, I discovered the various options they offered. Different lenders provided interest-only or principal and interest HELOCs, with varying fixed or adjustable interest rates and loan-to-value ratios.

Local credit unions often provided the best HELOC options, but it ultimately depended on your preferred terms and investment strategy. HELOCs also have different draw and repayment periods, ranging from three to 10 years for draws and five to 20 years for repayments.

Closing costs for HELOCs varied from $0 to $999, and some lenders required an appraisal while others didn’t. It was crucial to ask lenders questions about rates, LTVs, equity draws, and refinancing to find the most suitable option.

After speaking with lenders and analyzing the numbers, I developed a strategy to pay down my home while investing in real estate simultaneously. The plan was simple: use a HELOC to save money on mortgage payments and invest the savings in real estate. Our first HELOC allowed us to pay off $50,000 in principal on our home, saving us $30,000 in interest. Although we still had to pay interest on the HELOC, it amounted to only a few thousand dollars per year, significantly less than the mortgage payments we would have made over the next seven years.

Later on, we refinanced the HELOC to increase its credit limit, which enabled us to invest in two apartment syndications. This straightforward strategy worked well for us because we found a HELOC that aligned with our financial situation and investment criteria.

However, it’s important to note that this approach isn’t a one-size-fits-all solution. Depending on your investment niche, such as wholesaling, mobile home parks, or the BRRRR method, you can still use this strategy but tailor it to your specific needs. In fact, you might even be able to leverage it more effectively than I did, using other people’s money (OPM) to build wealth.

Regardless of your chosen investment path, don’t let the equity in your home go unused. Explore the options available to you, find the best funding solution, and start building your real estate portfolio. With the right approach and the right financial tools, you can turn your dreams of investment property ownership into a reality.

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