Just won a bid on a HUD home. 37k need about 13k in improvement if done myself. So I’m interested in obtaining a HELOC interest only, to fund the project $50k total. Hopefully 6 months will be all it takes to fixup and sell. Is this a good idea or not? What are the good and bad with this type of arrangement? This is my first venture and I’m a little on the cautious side. Any advise would be well taken, Thanks TP
For a 37k property, you’ll have trouble finding a bank willing to lend you 50k. For such a small amount of money, the question is do you have 50k worth of credit cards? The cheapest way might be to float it all on those low interest credit cards. Most people don’t have 50k worth of cash advance credit though. One other way is if there’s a Lowes center near you, I think you can get a credit card there and they have really good terms for 6 months. Then you just need to figure out where you’re going to get the other 37k.
I’m approved for 100k on a Home equity line of credit. So I could cover expenses either way. The low interest credit cards may be a good idea for supplies. My thought was with the HELOC there is no fees except for the interest. Only trouble is if the rate goes up(variable)
I was curious if this is a good way to invest in a property or is it uncommon? TP
truman, you have the right idea. If you can purchase the house and rehab with your HELOC, that is the way to go. I do not think you will find a cheaper way. 
You right on. Go with the HELOC and don’t worry about the variable rate. The variable is based on the Prime Rate. The Prime rate is tied to the federal funds rate and the FED stoped raising rates today for the first time in two years. It should stay at 5.25% or maybe range between 5.00% - 5.00% for the next few months.
Thank you for your replies. I think this is the way we will go, TP