Line of credit vs. hard money: which is better?

[Tim Ball]

I am very familiar with hard money but I am not certain exactly how lines of credit are set up.  If you are able to secure a line of credit, and you are looking to purchase buy-and-hold properties, would that be a better route than using hard money?  I know hard money is more expensive but how do credit lines work? If I bought a house on a line of credit, how long is the life of the loan?  Can I pay it off early?  Can I refi out of a line of credit purchase to a conventional mortgage on the house?  I am looking to start buying rentals and was wondering what would be the better route and why?  Let me know please.  Thank you.

[Marcia Maynard]

My understanding is that hard money loans are secured loans and are more expensive because of risk factors and the short term nature of the loan. They are often used for flips, but not as suited for buy-and-hold. @Jay Hinrichs may have some insight on that.

We maintain a $100K HELOC at our local credit union, secured by our primary residence. The annual fee is $25. Our terms are 3.25% (adjustable, but it has stayed at the same rate since we opened it over 10 years ago). We can borrow on it, at will, for any reason. When we draw on it, we pay interest only. We use it for short-term needs only.

In March of this year we pulled $100K from our HELOC to make an all cash purchase on a SFR. After we finish the rehab, we will seek financing on the ARV of the property, probably via a conventional loan. Then we will pay off the HELOC loan. Rinse and repeat.

You can find general information on line about HELOCs and HMLs that may be helpful. [My previous post was removed, perhaps because I included links to wikipedia about those. Sorry.]