Using a HELOC for the BRRRR Method (Real Estate Investing)

The Infinite Returns Engine

The BRRRR method is the holy grail of real estate investing because it allows you to recycle the same capital over and over again. The hardest part? The first bucket of cash. That is where your HELOC comes in.

Step 1: Buy (The Acquisition)

You find a distressed property for $100,000. Banks won't lend on it because it has no roof. You write a check for $100,000 using your HELOC.
Status: You own the house cash. You owe your HELOC $100k.

Step 2: Rehab (The Value Add)

You draw another $30,000 from your HELOC to fix the roof and kitchen.
Total Investment: $130,000.

Step 3: Rent (The Income)

You place a tenant paying $1,600/month.

Step 4: Refinance (The Exit)

Now that the house is fixed, it appraises for $180,000. You go to a bank and get a generic investment mortgage (DSCR loan) for 75% of the value ($135,000).

Step 5: Repeat (The Recycle)

The bank gives you a check for $135,000. You take that cash and pay off your HELOC ($130,000).
Result: Your HELOC balance is $0 (ready to use again). You own a rental property with $45k equity ($180k - $135k). Your tenant pays the mortgage. You have $5,000 extra cash in your pocket.

The Risk

This works only if the Appraisal comes in high enough. If the house only appraises for $130,000, you can only refinance $97,500. You would leave $32,500 stranded on your HELOC. This is why "Buying Right" is critical.