Maximize your cash flow, find better tenants and keep vacancies low.

Rental Success in the Lone Star State: 5 Tips for Texas Landlords

Owning a rental property in the ‘landlord-friendly’ state of Texas has plenty of perks. Texas boasts a potent combination of great weather, strong employment and low taxes that attract plenty of renters to thriving cities like Austin, Dallas, Houston and San Antonio. 

But with reports of rents flattening in 2024 after years of sky-high growth, how do you ensure your Texas rental home works for you and your financial goals? 

To make sure your rental home runs smoothly (and with the best possible cash flow), here are 5 tips for owning a successful rental home in Texas. 

1. Take a long-term approach to your rental property in Texas

After huge price hikes in cities like Austin and Dallas, asking rents are starting to decline across Texas. But this isn’t all bad news for homeowners in the state and here’s why. 

First of all, price drops are largely impacting apartments, where supply has improved in the short-term. In 2024, Dallas and Austin are in the top five cities for supply of new apartments, which has helped to meet demand. But this short-term influx is expected to end in 2025, with new construction declining and long-term supply shortages to continue. 

Then you have the national issue of housing affordability. With homeownership remaining out of reach for many in 2024, demand will remain for livable single-family rental homes in Texas.

This is why having a long-term mindset for your rental home is so important. If your local area does become a renters market, your home should stand out as a place people would love to live in for years to come. Rather than trying to cash in on market fluctuations and riding the rollercoaster of high tenant turnover, look at investing in the livability of your home to make your listing stand out. 

Using this approach, Belong has helped over 2,000 homeowners make sure their rental homes meet a high standard of safety and livability to reduce vacancy, increase rental values, and attract dependable, long-term residents. We know it works, because 82% of Belong Residents renew their 1-year lease.

Read More: How Belong Inspections Reduce Vacancy and Prepare Your Home For New Residents

2. Prepare your Texas home for the market peak

Summer rentals usually make us think of vacation homes, but it’s also when long-term rental demand peaks. Summer is the time when families settle into a new area before the next school year commences. It’s also when people decide they won’t endure another frosty winter. So they look for a new place to call home and seek out the clear blue skies of Texas. 

This makes the winter/early spring months the perfect time to make those upgrades you’ve been putting off. Give your home a fresh coat of paint, tidy up the garden beds and get your home ready to list as rents rise. Establishing a 12-month lease in summer also ensures that renewals or lease expiries also coincide with this market peak year-on-year. 

Read More: Peak Cash Flow: How To Achieve The Best Rent By Listing In Summer

There are few things more important to rental homeowners than positive cash flow. That is, having your rental home earn more income than it costs to operate and service debt. 

Cash flow in real estate is different to profit, because it’s not tied up in the asset itself. Cash flow is the passive income that unlocks a better lifestyle, the reserves to build for retirement — maybe even grow your investment portfolio.

If your residents stop paying their rent, this income will grind to a halt. As the expenses pile up, your cash flow can quickly slip into the negative. Belong protects Texas homeowners against disrupted cash flow by offering guaranteed rent. 

Guaranteed rent means your income is still paid on time, regardless of when we receive it. This makes your passive income more predictable by eliminating payment delays and rent chasing. 

Read More: How Guaranteed Rent is Changing Property Management Forever

Part of being a successful landlord is knowing your rights and responsibilities. But there is no one set of rules that apply to Texas homeowners. Rental housing is governed at a local level, with regulations varying between counties and cities. If you’re self-managing a rental, you’ll need to ensure your lease arrangements are current and keep an eye on proposed changes. 

In September 2023, House Bill 2127 was passed to allow state regulators to override local ordinances and create more consistent laws. But, the cities aren’t happy. This bill is now in litigation with Houston, San Antonio and El Paso all suing to block the legislation. 

That means that until this is resolved, you’ll have to keep an eye on local bills that could impact your rental. For example, Austin and Dallas are the only two cities that have a ‘right to cure’ law and require longer notice periods for evictions. 

Of course, you can also knock this one off your to-do list by hiring a trusted partner to stay up to date for you. 

Read More: What Texas Landlords Need To Know About Rental Housing Laws in 2024

Your rental home can only be a reliable source of income if it stays rented. One way to ensure your rental home remains a successful asset is to invest in proper maintenance of the home and to have the right insurance coverage. 

Budgeting for regular maintenance and insurance is a short-term expense that can pay off long-term. It’s cheaper than having to make major repairs or go through a period where the home can’t be lived in, especially in the case of a fire or natural disaster. 

This is why Belong has built an incredible vendor network of over 10,000 vetted contractors across the country. Homeowners can make instant requests and set up subscriptions for regular maintenance on your rental home — even purchase rental home insurance. And to avoid any dents in your cash flow Belong offers flexible payment options for all maintenance and insurance services. 

Read More: Why Ignoring Rental Home Maintenance Could Cost You More Than Repairs

Achieve financial freedom with Texas real estate

If you’re looking for a long-term solution and stability in your rental experience, Belong has you covered. We’re making rental finances predictable by offering stable, guaranteed rent. We’re providing flexible payment options to keep your cash flow steady. And we’re doing it while providing a better way of living for the millions of Americans who rent. 

Working together, we can put people first and change what it means to rent a home in Texas. Belong can help you reach your financial goals, while also creating lasting, positive impact on innumerable lives for decades to come.

Interested in learning more about Belong PRO services and availability in Texas? Check out one of our local pages below:

What does it take to own a successful rental home in Texas? Get tips to maximize your cash flow, find better tenants and keep vacancies low.

Get Predictable, Guaranteed Rent For Your Texas Rental Home

This cheat sheet will answer 10 top questions for homeowners on what to expect from the eviction process for rental homes in Seattle and Washington State.

Top 10 Homeowner Questions Answered On The Eviction Process in Washington State

Did you know the eviction process for rental homes in Seattle and Tacoma differs from homes in the wider Washington region? Evictions are already stressful and complex. Changing regulations and local ordinances make the process all the more challenging for homeowners. 

To help you prepare, this eviction cheat sheet will answer the top 10 questions homeowners ask about the eviction process in Seattle and Washington state:

1. How can you evict someone from a rental home in Washington?

There are two ways to remove a renter from your home in Washington state: 

End the tenancy and provide written notice to move out

Filing an ‘Unlawful Detainer Action (UDA)’ through the court system 

If a 6-12 month rental lease agreement is about to expire, you can provide 60 days written notice to end the tenancy. If you’re on an indefinite month-to-month lease, things can get complex. Depending on the local laws for your city and the details in your lease, you may need to provide a reason to end the agreement. It’s worth reading up on the Washington state legislation in this scenario. 

If a resident doesn’t leave, you will need to file an eviction lawsuit to have them removed. Check your local jurisdiction for notice periods as the 20-day notice period required by some cities has increased to periods between 60 - 120 days.

If the tenant breaches the terms of your lease agreement and can’t rectify the situation, such as non-payment of rent or conducting criminal activity, you can also file for an eviction lawsuit. 

If your home is in Seattle, you must abide by the local jurisdiction that prohibits “no cause” termination of lease agreements. Seattle’s Just Cause Eviction Ordinance outlines that no lease agreement will be terminated without a valid reason, even if it’s month-to-month or due to expire. There are similar measures in the cities of Tacoma and Bellingham, with pressure for other localities to adopt the same measures. This is why it’s important to get advice from an industry professional or attorney before attempting to end a tenancy. 

Read More: 5 New Laws Washington State Landlords Should Be Prepared For in 2024

2. What are the reasons you can evict someone from a rental home in Seattle, WA?

The City of Seattle has stronger protections in place than many areas of Washington. For example, requiring landlords to show “just cause” to end a tenancy — even if a lease agreement is expiring. Be sure to check your local laws before terminating any rental agreement in Washington, as these protections may be adopted by other areas over time. 

For example, Seattle and Tacoma have introduced limitations that prohibit evictions during cold-weather, eviction of students or educators during school periods, and evictions based on a tenant’s status as a first responder, service member, senior, health care provider or educator. 

This is why it’s important to seek legal advice and check with local ordinances before filing for an eviction. You can check Seattle’s municipal code here for details and exceptions to eviction notices. In Tacoma, the Landlord Fairness Code introduced new rules in 2023 and Bellingham’s city regulations for landlords are here. 

3. What is Seattle’s Just Cause Eviction Ordinance?

The Just Cause Eviction Ordinance outlines reasons a landlord can end a rental agreement, even if it’s month-to-month or due to expire. As of July 2021, homeowners must offer a renewal on expiring lease terms unless you have a justifiable reason not to renew. This safeguards responsible residents from being evicted for no reason or to seek higher rent from a new tenant. 

The following reasons are examples of “Just Cause” for ending a resident’s tenancy in Seattle:

Failure to follow a notice to pay or vacate

Repeated failure to pay rent, when four or more written notices are issued over a 12 month period

Breaching a lease agreement and not complying with orders to rectify the situation

Repeated lease violations (3+ times in a 12 month period)

Criminal or illegal conduct on the property

When a tenant's occupancy is conditioned upon employment on the property and the employment relationship ends

As the homeowner you can also cancel the rental agreement with proper notice (usually 30 - 120 days) if you need the home vacant for a valid reason. In these instances you may need a permit and/or cover the moving resident’s relocation expenses. 

Reasons you can end a tenancy in Seattle to repossess the home include:

When you have intent to sell the property

So that you or your immediate family can move in

To do substantial work on the property that requires the resident to move out

To demolish the property, convert it into a cooperative, or convert it into nonresidential use

To reduce the number of people living in the home to comply with the limit under Title 23. You must give the tenants 30 days to meet the current legal limit.

To discontinue to use of an accessory dwelling unit (ADU) after a violation notice has been received

When you receive an emergency order to vacate the home and the conditions have not/can’t be corrected 

4. Do I have to take tenants to court in Washington state to evict them from my home?

Yes, in Washington all evictions go through court. If you can’t attend physically, as of 2023 landlords and tenants can ask that a hearing be held remotely. The courts need to grant this request unless there’s a reason for the parties to attend in person. 

5. Do I have to offer tenants mediation before an eviction? 

In 2024, landlords no longer have to give the option of mediation or dispute resolution to resolve unpaid rent before an eviction can be filed. 

In 2023, there was a pilot program that made dispute resolution a mandatory option to resolve unpaid rent issues after COVID-19. This program ended in June 2023.

6. How much does an eviction cost in Washington State?

Costs throughout the eviction process in Washington may include:

Filing fees: Filing fees can vary depending on the county where the eviction is taking place, but it typically ranges from $100 to $250.



Serving fees: If you hire a process server to deliver court documents and ‘serve’ the tenant, you will need to pay their quoted fee (around $50 - $100+).



Attorney fees: If you hire an attorney to handle the eviction, the cost can range from a few hundred to a few thousand dollars, depending on the complexity of the case and billing quoted by the firm you’ve hired.


If you expect that your property management fees will cover the costs of an eviction, be sure to check the fine print. When we ranked the top-rated property management companies in Washington, we found that many eviction protection packages have strict limitations that can leave you with out of pocket expenses. Not only does eviction protection increase your management fees, most still charge per hour for overseeing the eviction process and charge extra if staff need to attend court on your behalf. 

If you choose to partner with Belong, you’ll have real peace of mind that your eviction process is supported. If Belong ever needs to evict a resident that we have chosen (not existing leases or tenants), Belong will cover legal costs up to $15,000 — that’s around 3x - 15x what property managers are offering! 

7. How do I find my local court to process an eviction?

There are 39 courts in Washington State, one for each county, listed on the Washington Courts website. 

8. What written notice do I need to give tenants if they don’t pay their rent? 

How long does the eviction process take in Florida? What does it cost? This guide will step you through what owners can expect from Florida’s eviction process.

No, You Can't Change The Locks: 8 Must-Know Eviction Laws for Florida Landlords

Evictions are usually a last resort for Florida landlords. While no one wants an eviction on their to-do list, when your rental income dries up or a tenant is damaging your property, it's time to take action.  

If eviction from your Florida rental property is necessary, it will be a lot easier if you have a good handle on the proper procedures and laws in the state. In 2023, the state passed changes to the Florida Landlord and Tenant Act or Florida Statute 83. This overturned a number of local city ordinances around notice and evictions, so things may have changed since your lease started. 

While every eviction situation is unique, Belong put together a quick guide of 8 common questions to support Florida landlords in 2024. 

What eviction rules have changed in Florida for 2024? 

A notable change to Florida tenancy laws is that notice periods have increased when ending a monthly agreement. If you need to terminate a month-to-month tenancy, you can give 30 days written notice to vacate your property. This has doubled from the previous rule of 15 days. 

When a lease has expired, written notice periods depend on how frequently rent is paid:

Month-to-month: 30 days (increase from 15 days)

If the resident remains in the home after the notice period has passed, you have cause to file an eviction lawsuit. 

Other 2023 changes that impact tenancy laws (but not evictions) include accepting a fee in lieu of a security deposit, returning deposits on time, caps on late fees and conducting background checks on employees and contractors. 

What are the reasons you can evict someone from a rental home in Florida in 2024? 

In Florida, you need 'just-cause' to end a lease agreement. Valid reasons include:

Not vacating after a lease has ended and notice has expired 

Not upholding responsibilities under tenant-landlord law, such as destroying or defacing the premises, having a pet without permission, or unreasonably disturbing neighbors in a breach of the peace

Homeowners should also be aware of their obligations under Florida's landlord-tenant statute to keep the property in good repair and ensure the home is habitable. If you fail to do so, your resident has the right to withhold rent, provided they issue you with a notice of their intent. You will get seven-days notice to correct the defect/s and the resident can't be forced to pay rent or threatened with eviction during this period. 

How much notice is needed for non-payment of rent? 

If a tenant fails to pay rent, you can provide three-days notice to vacate. This notice gives the resident three business days to pay owed rent or leave.

If the resident pays the rent within the three-day period, you can't proceed with an eviction and the tenant continues their existing lease arrangement. If it happens again, the process must be repeated.


If you don't receive the rent, but the tenant vacates within the three-days, you may use the security deposit to cover the unpaid rent. If the security deposit doesn't cover all of the rent due, you have the option to sue for the amount owing.


If the resident doesn't pay the rent and remains in the home, you can file a summons and complaint with the county court to gain possession of the property. 

How much notice is required to evict for a lease violation? 

For a lease violation you must provide the tenant with seven-days notice to vacate your Florida home. It's worth getting legal help to put this notice together, but if it contains any errors it's considered defective. You may need to start the process and notice period over again. 

During this seven-day period, you need to give residents a chance to fix things if it's a minor infraction. For example, if your tenancy agreement states "no pets allowed" and they adopt a cat, you can allow them to surrender or rehome the cat before proceeding with the eviction process. 

If violations continue, you don't have to keep giving them chances to rectify. Also if they behave in a way that can't be easily rectified (for example, conducting illegal activity or causing considerable damage), this is an "incurable violation" for which the tenant can not make amends. 

Can I force a renter to leave my Florida property?

No, you should never take matters into your own hands when you need a resident of your rental home to leave. Activities such as shutting off the utilities or changing the locks to your home to keep a renter out is called a "self-help" eviction and is illegal in Florida. If you are found to be forcing an eviction illegally, you could be sued for up to three months' rent or damages (whichever is greater) plus legal costs under Florida laws. 

How can I get someone removed from my rental home?

Only a Florida law enforcement official has the authority to remove someone under a writ of possession. If you believe someone is living in your house illegally with no lease (known as 'squatting'), you can provide local police with a sworn affidavit. Under Chapter 82, Section 35 of the Florida code, this will allow police to remove the unlawful occupant. 

How long does the eviction process take in Florida?

On average, it takes 20 - 37 days to evict a resident of your rental property in Florida. If the eviction is not contested and the process runs smoothly, it could take as little as 7 - 15 days. 

The estimates below are the typical processing times, but be aware that if your local court faces a backlog of cases, it could take longer to receive a hearing date if required: 

Court enters a default judgment or assigns a hearing date: 5 - 7 days

The clerk of court enters a writ of possession: 1 - 3 days

Sheriff executes writ of possession: 1 - 7 days

Once an eviction has been approved, the residing parties have 24 hours to vacate. If they do not vacate, a law enforcement officer will need to handle their removal from the property. 

How much does an eviction cost in Florida?

This depends! Evictions can be complex and unique, so costs can vary, especially if you end up in court and/or require an attorney. The Miami-Dade Clerk of the Courts Office advises that an eviction filing costs $185 - $340. 

But even filing fees vary depending on the type of eviction that you require. Pasco County has a list of Landlord/Tenant Eviction Fees and Costs here, which can provide a good reference point to start. Most counties have downloadable forms and fee schedules available on their websites, so be sure to check out your local county for resources. 

If you expect that your property management fees will cover an eviction, be sure to check the fine print. Belong ranked the top-rated property management companies in Florida and found that most eviction protection packages cover filing fees only and are limited to around $500 - $800, leaving you with considerable out-of-pocket expenses if things aren't straightforward. Not only does eviction protection increase your management fees, most still charge for overseeing the eviction process and add on additional costs if any of their staff need to attend court on your behalf. 

Get Up To $15,000 Eviction Coverage

Homeowners insurance vs landlord insurance vs short-term rental insurance. What’s the difference? Discover what you really need to protect your rental home.

What Type of Insurance Should I Get For My Rental Property?

If you have homeowners insurance on a rental home, we’ve got some bad news. Your money is going to waste.  

That’s because the moment you list a home on the rental market or start using it as a vacation rental, you’re no longer covered. 

Homeowners insurance policies only offer protection for owner-occupied properties. 

When you own a rental, be that long-term rental or a short-term vacation rental — you need the right insurance policy to protect your asset. If you don't, you could have a claim denied and be liable for expensive repairs and legal fees. Oof. 

Now insurance isn’t exactly known for its simplicity and transparency. There’s a lot to decipher between homeowners insurance vs. landlord insurance vs. short-term rental insurance. But this article will give you a quick guide into the coverage homeowners need for the use of their home as a rental.

What type of insurance do homeowners need for a rental property?

Let’s start with homeowners who rent out their home long-term. This means you have tenants in the home full-time and the occasional vacancy where the home is empty.

You’ll need a policy called Landlord Insurance or Rental Property Insurance. Depending on the type of coverage you choose, this can protect you and your rental home against:

Structural damage of the home itself in instances of vandalism, theft, fire, or storms

Liability from injuries that happen on your property or damage caused by your residents and/or their guests

Loss of rental income when the property is uninhabitable during repairs and restoration

When you’re shopping for rental home policies, you may come across the term ‘Dwelling Policy’ or ‘DP1, DP2, and DP3’. In a nutshell, this is a tiered system that defines the level of coverage. DP1 being a budget policy, DP3 being the most expensive with the most inclusions and DP2 falling mid-range in between. 

Most DP2 and DP3 policies will have the option to include loss of use. This is especially helpful for those who rely on rental income as it will cover a shortfall in rent. 

Regardless of tier, most policies exclude cover for flood and earthquake damage, which is an added extra. What you choose should depend on your budget, risk, and circumstances. There are also options to include coverage from FEMA’s National Flood Insurance Program. 

So what about if you have a short-term vacation rental? Landlord and Rental Property policies aren’t suitable for these, which we will cover next.

How much does landlord’s insurance cost in 2024?

In 2024, expect to pay an average of 15-20% more for a landlord insurance policy than you would for standard homeowners insurance. 

For example, if you took out a policy for a rental home in Sacramento, postcode 95814. According to this insurance.com calculator, if the dwelling was covered for $400,000 in rebuild costs with a $1,000 deductible and $100,000 of liability insurance, you would expect to pay between $962 - $2,921 per year for a homeowner policy in 2024. A landlord’s policy would be 15-20% higher, so expect a range of $1,106 - $3,505 per year for the same property, depending on how much coverage you opt for. 

Like all insurance, the cost of a premium will vary depending on:

Age, construction, and condition of the home

Whether you choose to pay upfront or monthly

Any optional extras included such as water damage and vandalism 

Will home insurance cover an Airbnb or short-term rental?

You guessed it: homeowners insurance won’t cover your home if it’s used as a short-term or vacation rental. And neither with a landlord policy. In this case you’ll need specified short-term rental insurance. This is because short-term rentals are higher risk than long-term rentals. 

Now it’s true that most vacation rental platforms include protection against guest behavior. But it’s important to remember that these are not sufficient insurance policies. Some platforms will offer host liability insurance, but this will do nothing to protect the home itself. 


If your property is hit by structural damage from a fire or storm, a platform like Airbnb or VRBO is not going to foot the bill. If it’s impacted by vandalism or theft that didn’t occur from a guest, you won’t be covered. This leaves you exposed to a lot of risk. 

How much does short-term rental insurance cost?

Expect to pay anywhere from 10-70% more for short-term rental insurance than you would for a homeowner policy. The actual cost of vacation rental insurance will vary depending on your home and its usage, however costs average $1,500 - $3,000 per year in 2024. 

Despite being banned on most platforms, vacation rentals are still notorious for wild parties and can leave property owners with massive cleanup bills. Making claims against guests for extra cleaning charges or damage can be a tough process and hard to prove. 

It’s worth keeping these additional costs in mind when comparing whether short-term or long-term rental is the best financial option for your home. 

Make insurance one less decision to worry about

With the option to build in the right Rental Home Insurance coverage for what you need, Belong will have your long-term rental home protected in minutes. It’s one of the many ways Belong is making it easier than ever for individuals to achieve financial freedom with a rental home.

To see how Belong is simplifying the rental experience (and making it easier to choose long-term renting for your home), visit our homeowner's page and learn about services in places like Austin, Charlotte, Los Angeles, Miami, San Francisco Bay Area, Seattle, and many more. 

Disclaimer: Belong thinks the word landlord is outdated and prefers ‘homeowners’. But in this article we need to make an important distinction between owner-occupied homes and landlords with tenant-occupied homes or vacation rentals, so we have to use the words landlord and tenant a little more than we’d like. This article provides a guide on the types of insurance available and approximate costs but should not be considered financial advice. Please read all insurance policy guides to ensure you have something that suits your personal home and situation. 

Enjoy The Best Insurance & Guaranteed Rent

FAQS on Home Equity Lines of Credit and common uses, requirements to qualify, tax deductions, and the pros and cons of taking out a HELOC on a rental home.

What is a Home Equity Line of Credit and How Can It Benefit Rental Owners?

Home equity is the difference between what your home is worth and how much debt is owed against it. When your house appreciates and/or you have paid off a chunk of your mortgage principal — you have equity. 

While rental homes are not considered to be a liquid asset due to mortgage financing and the lengthy process of selling one, you can turn what you own of this home into cash through financing. One option is known as a Home Equity Line of Credit or HELOC, which is available to people who have paid off at least 15-20% of their mortgage. 

HELOCs are often used by owners of rental properties to finance projects such as capital improvements or renovation. This helps to increase the value of rental returns and appreciation of the home without dipping into your savings. 

In this article we explore frequently asked questions about Home Equity Line of Credit and common uses of HELOC for rental homeowners, covering the following questions:

What is a Home Equity Line of Credit (HELOC)?

What do I need to qualify for a Home Equity Line of Credit?

What is a Home Equity Line of Credit used for?

Can I get a tax deduction on the HELOC interest paid for my rental home?

What are the pros and cons of taking out a Home Equity Line of Credit?

What is a good alternative to a HELOC to finance renovation of my rental home?

A HELOC is a line of credit that allows you to borrow against your home equity. For example, if your home is worth $800,000, and you owe $500,000 on your mortgage, you have $300,000 in equity that can be borrowed against. Typically you need to have paid off at least 15-20% of your mortgage to qualify for HELOC financing.

HELOC financing is different to refinancing an entire mortgage. Working a little like a credit card, the HELOC defines an amount you can borrow up to and you will only be charged interest on the amount borrowed. This will be by way of a variable interest rate that is typically lower than a personal loan or credit card financing. 

Requirements and repayments will vary based on the amount you wish to borrow, the equity in your home and the lender you choose. Generally, to qualify for a Home Equity Line of Credit you will need:

At least two years of verifiable income history

A debt-to-income ratio of 40% or less (that is, all your monthly debt payments divided by your gross monthly income)

You can use money from a HELOC for almost any purchase or debt consolidation — even as a down payment on another home. Some real estate investors use the equity in one rental home to finance another and grow their portfolio. But more commonly, owners of rental property use a HELOC to finance capital improvements or renovations, improving the market value of their home to maximize their rental income and appreciation opportunities.

It depends! The tax rules on HELOCs and rental properties are quite complex since the IRS introduced changes in 2017. These rules will last until 2026 unless altered or extended further. 

Most expenses relating to a home used as a rental property are tax deductible and the interest portion of your HELOC might be included, depending on how you use the funds. There will also be limitations if you’re deducting a loss on the home or the income is considered passive activity. Check with your property accountant or tax professional before making tax claims based on your individual circumstances and how your HELOC funds have been used. 

New rules stipulate that for the interest on home equity debt to be tax deductible, you must ensure:

Funds are used to “buy, build, or substantially improve” a property

Funds can only be used on the property they are drawn for (so you can’t claim interest on a HELOC on your own home to improve your rental and vice versa)

Deductions meet the restrictions on the loan size ($750,000 is the total new limit for deductions on all residential debt, including HELOC and mortgage interest) 

Broadly, if you’re making capital improvements to your rental property such as a kitchen remodel, replacing the roof or installing a new HVAC then it’s likely you can deduct the interest payments of the HELOC used to fund the cost. You won’t be able to deduct the actual expenses incurred, but they can be depreciated. 

If you’re using the funds to make maintenance repairs, you will not be able to deduct the interest on a HELOC. You will however be able to deduct the actual expense associated with essential repairs and maintenance. 

The benefits or “pros” of taking out a HELOC include:

HELOC provides fast and easy access to cash without having to withdraw your savings or sell off other investments such as stock

HELOCs are a form of secured loan so they offer a lower variable interest rate to most personal loans and credit cards

Unlike Home Equity Loans or refinancing options, there is no need to apply for a separate loan, you can redraw the funds as needed

HELOCs offer flexibility in your budget — you don’t need to borrow and pay interest on $20,000 if you only end up spending $10,000 (and you don’t need to find more funds quickly if you go over budget) 

You may be eligible to claim a tax deduction, particularly if you are funding necessary repairs on a rental home — or making capital improvements that can be depreciated

The risks or “cons” of taking out a HELOC include:

Your home or rental property will be used as collateral, which puts you at risk of foreclosure if you default on your repayments

The interest rates on HELOCs are variable and susceptible to rate hikes, which could blow your budget and increase repayments over time 

HELOCs add time to your mortgage as it withdraws from payments you’ve previously made

Payments are over and above your mortgage repayments and can also include extra fees 

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