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Investing In Real Estate Podcast

How do interest rates work on a home equity line of credit? What’s the difference between a fixed rate HELOC and a variable rate HELOC? And which one is better for investors? That’s the topic of our first question on today’s Q&A episode!

On this episode of Investing in Real Estate, I’m taking a swing at three listener questions on HELOCs, non-recourse financing, and what type of loan to get for a duplex. Join me on today’s show to hear my answers to your questions!

On this episode you’ll learn: 

  • The difference between variable rate and fixed rate HELOCs.
  • How a non-recourse loan is used.
  • What kind of loan you should consider when buying a duplex.

The Difference Between Variable Rate and Fixed Rate HELOCs

Most HELOCs that you will find today have a variable rate, meaning the interest rate can rise and fall based on market conditions. A fixed rate HELOC, however, allows you to lock in your balance at a particular interest rate, protecting you against market fluctuations. Fixed rate HELOCs are harder to come by, but they do exist. Both types of HELOCs are fantastic, especially if you’re leveraging your equity to buy performing assets. While a fixed rate is certainly preferable, I would still get a HELOC at a variable rate. One tip I can offer is that you is that once you’ve secured the line of credit, you can always ask your bank if they are able to convert your variable rate HELOC to a fixed rate.

How a Non-Recourse Loan Is Used

If you’re not familiar with a non-recourse loan, see my in-depth video here. A non-recourse loan is used in many scenarios, since it is based on the merit of the asset. At Morris Invest, we tend to use a non-recourse loan with self-directed IRAs, as well as for our international clients. A non-recourse loan is also great for those with lower credit scores.

What Kind of Loan You Should Consider When Buying a Duplex

The world of financing for real estate investing is incredibly vast. A lot of options are available, but here is what I would consider. First, a conventional loan is always a good option, and right now you can get a pretty decent rate. If for some reason that doesn’t work for you, I’d check out non-recourse financing. If your duplex needs a ton of renovation, check out construction loans.

Ask Me a Question at morrisinvest.com/clayton

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DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.

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Posted on

March 7, 2022

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