Cash out Refi vs. HELOC for a buy and hold investor?
Sorry for the newbie question but I wanted to confirm with BP that it makes more sense for me to cash out refinance vs. getting a HELOC.
Current situation:
$190K balance on primary residence (Property A)
Fair market value = $400K
3.875% fixed 30 year loan (Year 4)
Goal:
1) Buy another property for primary residence in the next year
2) Convert current Property A into a rental property
3) Would use cash out refi or HELOC (~$80K) to buy 2-3 more buy and hold OOS properties in the next 6-12 months
My rationale for using cash out refinance instead of HELOC
1) Current refi mortgage rate on Property A would be similar to current rate of 3.875%
2) The down payments toward the 2-3 OOS properties will be locked up for at least 5-10 years which makes it harder getting the cash to pay the HELOC down
3) Refinance rates would be fixed whereas HELOC rates are variable and may likely rise in the next 5-10 years(?)
4) The HELOC is for OO properties. Once I make Property A into a rental property, I would risk having the lender potentially cutting off my HELOC, right?
Is my assessment correct or am I missing something? Is there a scenario where HELOC makes more sense for a buy and hold / long term investor?