Welcome to passive real estate investing, the show where busy people like you learn how to build substantial passive income while creating wealth for the long term.

And now here's your host, Marco Santorelli.

Hello, my friends and welcome to another episode of Ask Marco,

where I answer your investing related questions.

Today's question is a great one. It's from Kelly. It's basically

should I use a helock for my down payment and she writes in and says,

hi Marco just would like to start with how amazing your podcast is and you have really

helped me outline a plan for financial freedom.

Well, Kelly, you're welcome.

I just

I just purchased a home that I live in and I'm interested in using a he-lock to purchase a rental property. This seems risky to use my home like this but would love your thoughts.

Okay, so for those listening and are wondering what a heelock is, I think many of you understand what a heelock is, but for those that don't, a heelock is a home equity line of credit.

So it's just the acronym for home equity line of credit. And it's really

just a loan, actually it's not even a loan, it's a line that you can draw from that is

secured by your home. Typically it's recorded as a second or third lean on your property

and you draw from it just like you would a credit card. You don't pay any interest on it while you

have it until you actually use it and typically these are

issued for a term of 10 years and after that you have to renew it or it just closes.

So the Heelock is interesting because it's typically a line of credit that you can draw from

any time at will for as much as you want, you use it and whatever you don't use you don't pay for. It's typically a very low interest rate and it's just secured by

your property which is the reason why you can get them for such a low rate of interest

and in addition to that the terms are typically interest only so you can draw,

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