Should I cash out equity in my rental

2 Replies

I own a rental that produces $250/mo cash flow currently. My wife and I want to buy another rental or a fix-n-flip. We are considering cashing out the equity in our rental via refinancing. The property is valued at $150k and we owe just under $90k. We have no experience with HELOCs so we are wondering if we should consider that route. We are just on the fence. We are not sure we want to pull out the equity. Any advice would be appreciated. Thanks in advance.

You need to figure out whether it’s worth the closing costs and such for $30K in cash.

No one (likely) will loan more than 80% on an investment property.

Ask around about HELOCs. They have lower closing costs, but will likely be at a higher rate.

You also have to consider that the additional monthly payment will cut into your cash flow. Maybe this is ok, maybe it’s not. It’s up to you!

You can do a HELOC up to 80% LTV . I got one last year with Pennfed, no closing costs and no appraisal since they do a desk appraisal and if it's sufficient they wont do a regular one. If it isnt then you'll be out $300 but that's it. Keep in mind it will be a 12 yr variable with a balloon payment due but that's not bad at all even if rates increase. Good luck!