I just put a property under contract that I was going to flip. After looking at some info on cash out refinancing, I am now considering this as it would be a strong rental in a great area.
This would be my 3rd buy and hold...1 rental, 1 rv storage yard and this property.
I have used a heloc for the 20% on each property but now if I hold this one traditionally my cash would not be enough to do another deal.
I have flipped 1 house earlier this year with the intention of doing a few more to draw the heloc down to nothing by end of next year.
If I do a cash out on this one I may not be able to pull all of my initial 20%/rehab out, but would be covering the notes/expenses and cash flowing some each month with a long term asset. So in essence I would still be adding to the heloc.
I can flip it and clear 30k to pay down the heloc as planned, but lose a potentially good rental property.
I am conflicted....flip or plan as cash out.
I also have another rental that I could do a cash out and reduce some on my heloc(interest only) and still cover note/expenses.
I do not like the idea of a balance on a heloc since it is interest only and is currently up to 6.5%
Cash out and reduce some of the 6.5% interest only to a fixed 4.77% and paying down with each payment.