Hard Money vs. HELOC

[Norman T Eng]

Hello all, 

I'm thinking of rehabbing a house. If the rehab costs, let's say, $80k, and I want to take out a loan. Is it better to do a hard money loan or a HELOC?

[Odie Ayaga]

You're thinking of rehabbing a house you already own or do you need money to purchase it as well? If you do have you already qualified for all the money you need for both? I think it's a little simplistic to just take whatever is cheapest without considering the particular situation. How much experience do you have? @Doug Smith said, HELOCs are tied to your property and if you've got little experience expect things to go wrong. That could be a lot of sleepless nights especially if it's on your primary that you and your family are living in. 

However, if you have other resources (e.g. cash, income, stocks) that you can rely on to ensure there isn't a default that helps the situation. HELOCs are also more like having cash on hand to me so putting all of it in one property may limit your other options if you're looking to purchase another property soon. It might cost you more in profits on this one property to go pure hard money, but it could also prevent you from using a combination of cash, your HELOC, and hard money to purchase multiple properties with more total profit. These are all factors (plus I'm sure many others) you should consider to make your decision.