Refinance or HELOC for 1st Rental
Trying to post this again.
I was given a property some years back as a donation. So the property is free and clear of any debt. Unfortunately, I was not able to use it as rental property and start my venture into real estate investing until now. The property is in need of some TLC, such as paint, they were heavy smokers and smoked in the house, appliances, and some updating.
Trying to decide if I should do a refinance or use a HELOC to make the repairs/update to get started. With the high interest rates now, not sure which would be better. What thoughts or advise would y'all give to someone in this situation.
If a HELOC is possible then I think that would be better because you wouldnt be stuck with the higher interest rate. Unfortunately, it seems like those are hard to find on rental properties.
Quote from @Taylor Dasch:
If a HELOC is possible then I think that would be better because you wouldnt be stuck with the higher interest rate. Unfortunately, it seems like those are hard to find on rental properties.
Taylor, thanks for the input. That is what I was thinking, but doesn't HELOC's interest rates fluctuate and are higher. I get the advantage is that it's only on what you take out. Is that why you are saying I wouldn't be stuck with the higher interest rate or am I missing something with the rates now?
Quote from @Kerry Baird:
Some lenders have fixed rate home equity loans, and some fix the rate on equity lines of credit. I called every lender in my area and asked, "With my FICO of ### what rates and terms can you give me on this house?" Each lender can make up their own set of parameters for HELOCs. I have seen the best outcomes on investment properties with small community banks and credit unions. I have posted a long list of HELOC providers for rental houses, but don't see a lender specific to your area. You'll have to call. They are harder to find than lines of credit on personal residences, but they can be found.
Great advise. Thank you both. I will start calling around.