Would HELOCs be a good move right now?
Hello,

**Here is a bit about my situation:**

In Los Angeles, California, here. Family owns 3 income properties in LA, all free of debt:

* 19-unit Multifamily \~ 3.8M 
* Single family Home \~ $1.6M
* Single Tenant Commercial  \~ $1.1M

They also own their own home which is $1.7M and has $430,000 of debt (fixed 30 year mortgage, payments are $3K a month).  

All the income properties cash flow.

My goal is to have money set aside for real estate investment properties.  As far as what or how much, it would depend where the market goes in the coming year.  

Also, we don't have a huge amount of savings.  At least not enough where I'm comfortable taking a chunk to buy real estate with. 

**So here is my question:**

Would you guys recommend taking out variable rate HELOCs on everything to have money set aside so if opportunities do come up, I can act quickly?

I would prefer HELOCs over just taking money out because I really don't know when a good real estate opportunity will arise, maybe a month from now, maybe 2 years.  And I don't want to be making monthly payments, especially during a pandemic that could effect cash flow.  

At this point only spoken to one bank but the reason I'm leaning toward variable rates is because the locked in rate nearly doubles the interest rate to 6.5%. 

I know banks are already tightening things up and they are currently overwhelmed but still figure I should try.

Thoughts?

Thanks
[{"id": "fnr3dqs", "text": "No, maybe one HELOC, but the thing that kills most real estate investors is over leveraging. Save cash right now. Those properties should be cash flowing like crazy.\n\nMaybe use the HELOC to secure a new property then place the long term debt on the new property and payoff the HELOC.", "replies": [{"id": "fs2npqz", "text": "Yes, that would be plan. Didn't clarify that in my post.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fnvqs6d", "text": "I hate paying interest for cash to sit idle. But a HELOC could leave you exposed to swings in rate or maturity risk, right? In addition to worse terms (LTV and rate).\n\nI would consider that opportunities will start to pop up late 3Q/4Q of this year. I think that's when servicers will start to take things back, and we'll actually see a little price capitulation on land. For example I have seen a bunch of land/development listings go up the last week or two, but they're going up at pre-crash market rates. People are trying to unload their pipeline but the pricing is unrealistic given the sudden shift in the economic cycle.\n\nIf this was my portfolio - I would shop for the best 60-70% LTV on the 19-unit MF. From other threads you should be able to get low 4's on this right now? Again looking to close in 3 months so you'll know if tenant performance is souring and you need to bail on this idea. \n\nSit on the 2-2.5M this fall until you find your acquisition. Then take out a HELOC on the SFH, or do more traditional development financing, depending on your needs.\n\nBankers and loan brokers on here probably have more sophisticated ways to play this, just my 2c.", "replies": [{"id": "fs2ntly", "text": "Thanks for this advice. Sorry for late response. Didn't have notifications on and just checked back on this.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fo6kdb2", "text": "Just be aware that if the property requires a title search and your state offices are closed (and not available through the Internet) it will be very difficult to close on a Heloc right now.", "replies": [{"id": "fs2nua4", "text": "Thank you. Noted.", "replies": [], "depth": 2}], "depth": 1}]