Real Estate Investing School Podcast – Episode 27

Title: Getting Creative with Your HELOC with Tyler Miller
Date: January 9, 2023
Host: Joe Jensen
Guest: Tyler Miller

Episode Overview

This episode dives deep into Tyler Miller’s creative journey through real estate investing, with a special emphasis on leveraging Home Equity Lines of Credit (HELOCs) as a powerful and often underutilized tool. Tyler shares his pathway from college beginnings to a diversified portfolio, candidly discussing his first deals, lessons learned, and actionable creative financing strategies that are accessible to listeners at nearly any stage.

Key Discussion Points & Insights

Tyler’s Real Estate Origin Story

• Catalyst: An LDS mission in Boston sparked Tyler’s business interest, but reading Rich Dad, Poor Dad led him away from the Harvard Business School track and into entrepreneurship and real estate.

  “It literally was Rich Dad, Poor Dad. I read that, and I consumed that book... it blew open my mind of like, this is how it’s done.” – Tyler (02:31)

• Educational Foundation: Tyler joined Renatus for training, building skills in comps, ARV, and other basics.

  “I got heavily involved with them and just started learning the ins and out, like how to run comps, how to, you know, what a CMA is, what ARV is.” – Tyler (04:43)

First Deal: The Meth House Flip

• Details: Purchased a meth-contaminated REO in Salt Lake City for $77,000, sold for $150,000—82 days from purchase to sale.

• Meth Remediation: Tested the property, negotiated for bank-paid clean-up, and considered it a negotiation advantage.

  “Luckily, we kind of had to do a full-fledged flip anyway. So it was really just not a big deal... hire a guy who does the remediation. He also took care of all the paperwork with the health department.” – Tyler (07:01)

• Lesson: “If you don’t want to do that, just hire a property manager. It’s that simple, you know what I mean?” – Joe (08:44)

Overcoming Barriers and Building Partnerships

• First-Time Confidence: Tyler partnered up mainly for comfort, not necessarily to cover for a lack of skills or capital—common for first-time investors.
• Financing Creativity: Utilized private money for flips and buy-and-hold deals when own funds were limited.

Long-Term Holds: Out-of-State Rentals

• Midwest Rentals: Purchased two turnkey properties in Danville, IL (never visited), structured as below:

  • 100% financed via 50% bank mortgage and 50% private lender (with a 5-year, 8% interest-only balloon).
  • Zero personal cash in the deal; cash flow exceeded payments, allowing for rapid principal paydown.

  “I actually had zero money in this deal... it literally was an infinite rate of return on these first two rental properties.” – Tyler (15:53)

• Creative Payoff Strategy: Aggressively paid down the mortgage and eventually the private lender, fully owning two properties in under five years.

Flipping, Lending, and HELOC Arbitrage

• Flips to Fuel Buy-and-Hold: Used profit from early flips to fund more lasting investments.

• Using Home Equity: Built a house at below market cost to create equity, then strategically opened a HELOC.

  • Lent out HELOC money to other investors at 12%, making an arbitrage profit (borrowing at ~3-4%).
  • Later used HELOC funds to purchase land, flipping it for a $50,000 gross profit.

  “I really think a HELOC is one of the most underutilized tools for building wealth.” – Tyler (24:35)

• HELOC Best Practices:

  • Only use HELOCs for income-producing assets, not liabilities or personal consumption.
  • Have a plan to pay it back quickly due to interest rate variability.

Mindset, Education, and Action

• Education as Risk Mitigation: Key to stepping into creative deals is not just knowledge of investments, but personal growth and mindset work.

  “Risk isn’t in the investment, it’s in the investor. The way you minimize your risk is just education.” – Tyler (26:18)

• Betting on Yourself: Tyler and Joe discuss the ability to start before you're ready, emphasizing action backed by foundational learning.

  “If you have enough belief or you have enough faith in something, you start to act.” – Tyler (54:52)

Practical Strategies & Deep Dives

How Tyler Structured His First Zero-Money Down Buy-and-Hold (15:53 – 19:38)

• Private Lender covers down payment;
• Bank loan for remainder (local credit union/portfolio loan);
• Paid private lender 8% interest-only for 5 years (balloon at year 5);
• Cash flow used to aggressively pay down mortgage, then retire private loan;
• Both properties fully owned before any balloons or rate resets occurred.

Getting and Using a HELOC (42:33 – 49:45)

• Application is simple: Less complex than a full refinance.
• Find the best lender: Shop around—terms and fees can vary widely.
• Draw period: 10 years to borrow/repay as needed; after that, a paydown period kicks in, but you can refinance/reset easily.

  “For the first 10 years, you’re able to just pull money out, use it for whatever, pay it back... it really is like a checking account, other than it’s got interest tied to it.” – Tyler (43:45)

• Cost: Many HELOCs are free to set up and refinance if you choose the right bank.

Leveraging HELOCs and Building Relationships (47:03 – 48:20)

• Combine learning and earning: Offer your HELOC funds to active investors at competitive rates in exchange for hands-on learning/mentoring.

  “I don’t care about the 8% or 10% interest you’re going to pay me... walk me through. Show me how to do the deal.” – Joe (47:14)

HELOC Tips

• Only use HELOCs for assets, not liabilities (25:13).
• Regularly refinance to increase available credit as property values grow and introductory rates lapse (46:08).
• Negotiate the best terms and lowest fees—every bank is different (48:20).

Notable Quotes & Memorable Moments

• On First Partnerships:
  “If that’s what it takes to get you into a deal, who cares? You don’t have to have the whole pie.” – Tyler (12:41)

• On Overcomplicating Investing:
  “You don’t have to be the professional... you’re just managing these different pieces to the puzzle.” – Joe (50:44)

• On Using a HELOC Responsibly:
  “The only money that comes out of that HELOC is for assets. It can’t buy any kind of liabilities.” – Tyler (24:59)

• On Real Estate as a Wealth Platform:
  “There’s just, I don’t know of another investment vehicle where you can have so much control and so many options and so many avenues for creativity. Real estate’s awesome that way.” – Tyler (34:30)

Tyler’s Guiding Principles & Lessons

• Win-win focus: Never pursue deals where someone else has to lose (51:07).
• Risk Management: “Risk isn’t in the investment, it’s in the investor.” Active learning and honest self-assessment trump market timing.
• Learning from Mistakes: Tyler candidly admits losing money in cryptocurrency due to lack of knowledge and contrast to his diligence in real estate (51:07 – 52:13).

Tyler’s Real Estate Mindset Going Forward (29:52+)

• Moving from Flips to Buy-and-Holds: Seeking cash-flow security, financial freedom, and long-term portfolio growth—not just big, one-off checks.
• Strategy: Build a foundation of free-and-clear long holds for safety, then feel freer to take risks with new investment strategies (41:14).

Essential Timestamps

• [02:31] – Tyler’s Rich Dad, Poor Dad realization
• [05:54] – Details of the meth house flip
• [15:53] – Detailed breakdown of the zero-money-down rental deal
• [23:02] – Land-flip funded via HELOC
• [24:35] – Why HELOCs are underused
• [42:33] – Deep-dive on getting and utilizing a HELOC
• [48:20] – Why you should always shop around for the best HELOC
• [51:07] – Core values and hard lessons

Closing Thoughts

• Main Takeaway:
  Creative financing (especially with HELOCs) is accessible to regular investors—not just the pros. The path requires education, networking, and the belief that you can learn as you go. Real estate’s flexibility offers a way to build wealth without risking your financial footing, so long as you’re strategic about your moves and the tools (like HELOCs) you choose.

• Best Quote to Sum It Up:
  “People just need to believe in themselves a little bit more and believe that they have the power within them to reach their dreams.” – Tyler (54:52)

Connect with Tyler

• Instagram: @t.miller.time

Reminders from Host Joe Jensen:
Learn enough, and then bet on yourself!