Heloc or Cash out Refi?? And best bank in Houston area

3 Replies

Have a house with 130k equity. Want to pull all or some out to invest in other properties. Can I get some feedback from others with experience as to what me be a better decision. The Heloc or Cash out refi? I'm leaning towards the refi to lock in the lower interest rates.

Also I'm looking for an investor friendly bank here in Houston. Anyone willing to loan 80% of BPO?? I have a small town bank in west Texas that will do this and have been able to pick up a couple houses for basically closing costs only.

Thank you!!

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@Robert Youngquist I'd have to suggest doing a HELOC on the property as you can typically get the first 10 years to pay interest only. Think of it like a big credit card that you can borrow from then pay back. Just my thoughts. @Arden Gist I'm interested in learning more about your lending options for investors.  Please feel free to PM me.  

@Robert Youngquist It would help to give some context of your business goals. I see from your title that you're an "Investor/Flipper". If you always have a flip going and plan to for the next number of years, then I suggest the cash-out refi to lock in a low interest rate and have that cash to put to work. Conversely, if you do one maybe two flips a year and you need spurts of large capital, then go for the HELOC.

We have a good bit of equity in our house, and I elected to do a HELOC. Since are doing about 2 flips a year, the time we aren't "strung out" with regard to capital I've found that NOT paying a note that month(s) outweighs the benefit of a fixed rate. Secondly, you can get a HELOC done these days with no closing costs, and by nature of the HELOC, it is an interest-only loan. So there isn't any financial impact to opening one, while the closing for your cash-out refi might be $4-5,000 hit to your home's equity. I would suggest wrapping those closing costs into your loan if you do go that route as to pay that price incrementally.

You should think about structuring financing around your business model, and not looking for a silver bullet financial vehicle.

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