HELOC vs. Mtg

2 Replies

We are purchasing a property in NJ, all cash, and would like to move on to the next purchase very quickly by cashing out the equity on this one. The property will be under our LLC. Would it be better to take out a HELOC (maybe pay interest only) or take out a 30 yr mortgage? Are both options available for an LLC? Any thoughts would be appreciated.

HELOC's typically in my experience will want to have the signer for the debt be a personal so they usually require you to quit claim it out, get the lending, then quit claim it back. Most commercial lenders that will loan to an LLC will typically not do 30 year ams (especially without a balloon) and if they do they are up around 6.5-8%. If you are trying for a 30 year loan it sounds like more a residential product in which case they will most likely want you to pop the property out to your personal name and then pop it back in. In general, if I know the exact amount I am looking for and I don't care about the option that the HELOC gives me then I'd suggest the 30 year. In either case you will mostly assuredly have to pop the property out or pay much higher interest. Hope this helps

Aquila, go to you tube and check out the P.I.L.L. method. That's the best way to utilize a heloc if indeed you choose to do so. Also on you tube Michael Lush calls it replacing your mortgage. Prayerfully this helps and gives you deeper insight in to how to utilize any line of credit so that your money works harder for you and not the other way around.

Happy Investing...

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