What method would you choose?

1 Reply

Hello Biggerpockets Community. What method (Cash-out refinance, HELOC, or Sell), do you utilize to continue your investment strategy when you have equity. I currently have a few properties, and with the market appreciation in the DC metro area, I have about $100k equity in each property I own (four total, nothing compared to what I read on here), and as such I want to continue to build a buy/hold portfolio, but at same time I'd also like to have some money available in case the market takes a turn, in order to be able to make some moves. With that said, what strategies do you use to continue your investment strategy and why?

@Brandon Malone the strategy here is based on your end use - so if you are "buying and holding" then you should look for a permanent type of loan. For example, a HELOC is a variable interest rate...so it's hard to know what your payment will be in the future. And after 10 years a HELOC will mature into a different loan product. Now HELOCs can give you cash immediately and only as much as you need. They also have lower closing costs. So many flippers use HELOCs. They use them, pay them back, and then do it again when needed. If you are buying and holding it is a smart plan to use a fixed loan product in order to have stable, predictable income. So a "cash out refinance" will be more along those lines. Also, keep in mind that the amount of equity isn't as important as the percentage of the value of the property. So if your $100k was just 10% of the value (meaning, you owe 90% of the property value) it would be very hard to get a cash out loan or a HELOC. Most investment property cash out loans want 75%-80% LTV max. Hope this helps!

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