When a turnkey real estate investment firm makes a presentation to you for an upcoming opportunity your first decision is simply a “yes” or a “no.” The next question you may ask is which of your assets you’ll use to finance the project. You can pull money out of your cash accounts but sometimesusing a heloc you’d rather just leave them there,

thank you very much. If you have a self-directed IRA you can certainly use those funds but what if the investments you’re currently invested in are doing rather well and you would rather keep the fund performing instead of depleting it or at minimum subtracting from it. Have you considered a home equity line of credit, or a HELOC?

A HELOC can be obtained at your local bank or you can even apply online with any bank of your choice. The HELOC acts like a revolving line of credit with the equity in your home being the collateral. Say your current home is valued at $500,000 and you currently have a first mortgage balance of $200,000. That leaves $300,000 available to you in the form of cash. Different banks will have different limits regarding how much they will lend based upon their own loan-to-value limits. Some states can also restrict the amount borrowed as well. Yet the HELOC provides some of the least expensive rates and is extremely convenient.

Consider you have an opportunity to invest in a project presented to you by a turnkey real estate firm. Instead of withdrawing cash and tying it up until the project is done or otherwise paid off you can simply transfer the needed funds from the HELOC. If the project requires a $50,000 investment, there will be a $50,000 lien filed against your primary residence. Once the project is sold and you receive both your principal as well as interest earned, you can pay off the existing lien and restore your credit line. The difference between the return from the investment and the interest charged to the HELOC is your profit. This will reduce your overall profit but when you do need to leverage another asset for an investment, keep the HELOC on your list.